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Published by: Abhinav Raj on Sep 02, 2011
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TEAM I Diana P Ramesh R Saurabh Singh Sameer Chaubal Deepak Choedia Deepak Shinde Ferdinand J Padmanabha Johind M





benefitted the most -acquiring company usually pays a more . On workers or employee . On top level management .most affected.variation in culture 3.layoffs 2.IMPACT OF MERGERS AND ACQUISITIONS 1. they are harmed by the same degree to which target firm shareholders benefitted Target firm .clash of egos . On shareholders: Acquiring firm .

. (both were already controlled by Lakshmi Mittal) and merged with International Steel Group Inc. (the remnants of Bethlehem Steel.V. Usinor (France) and Arbed (Luxembourg) in 2002. • Created by a merger of the former companies Aceralia (Spain).V. • Formed when Ispat International N. acquired LNM Holdings N.THE TWO COMPANIES MITTAL STEEL • Was one of the world's largest steel producers by volume. and turnover. Republic Steel and LTV Steel) in 2004 ARCELOR • Was the world's largest steel producer in terms of turnover • Second largest in terms of steel output.

Mittal Steel announces US antitrust clearance for Arcelor bid and the approval of the offer documents by European regulators. the Norambar and Stelfil plants.Mittal Steel offer to the shareholders of Arcelor to create the world's first 100 million tonne plus steel producer. located in Quebec.THE YEAR 2006… • January 2006 . and the Stelwire plant in Ontario. . • April 2006 .Mittal Canada completes the acquisition of three Stelco subsidiaries. • February 2006 .Renewal after Hurricane Katrina and new galvanised line • May 2006 .

.Mittal Steel and Arcelor reach an agreement to combine the two companies in a merger of equals. acquires Sicartsa. the leading Mexican long steel producer. sells the Italian long carbon steel production Travi e Profilati di Pallanzeno and San Zeno Acciai to Duferco. • December 2006 . • September 2006 .THE YEAR 2006… • June 2006 . under which it will pay out 30% of net income annually. signs a MoU for the Greenfield project in Orissa.Arcelor Mittal announces new dividend policy.sells Thüringen long carbon steel plant.

RESULT • The merger resulted in the creation of the world’s largest steel company.000 employees Presence in 60 countries A global leader in all of its target markets. • 2007 revenue .$105 billion Steel production .10 percent of global output 320. .

RESULT • Though competitors they exhibited little overlap in terms of their operations. • Arcelor’s attributes proved to be highly complementary with Mittal owning much of its raw materials such as iron ore and coal and Arcelor having extensive distribution and service center operations. . • Unlike many mergers involving direct competitors. a relatively small portion of cost savings would come from eliminating duplicate functions and operations.

• The French opposition was initially very fierce and has been criticized in the British. Luxembourg and Spanish governments strongly opposed the takeover. with Arcelor's chief executive at that time.REACTIONS TO THE TAKEOVER • Directors strongly opposed the takeover. • The French. American and Indian media as double standards and economic nationalism in Europe. even dismissing Mittal as a "company of Indians". . Guy Dollé.

• Issue raised at several forums especially through commerce minister Kamal Nath.LN Mittal himself felt that there was no case of “racism” here as Mittal Steel was a European company and NOT an Indian one. • Alleged that India had threatened not to ratify a taxation accord with Luxembourg due to the latter’s opposition to the deal.THE INDIAN GOVT’s STANCE • Deal was not getting pushed through because of Lakshmi Mittal’s Indian nationality. • Irony . .

Achieve rapid integration . .Manage effectively daily operations .TOP MANAGEMENT ArcelorMittal top management set three driving objectives before undertaking the post-merger integration effort. .Accelerate revenue and profit growth.

train the workforce in techniques of service Set goals that are based on service Reward an recognize people for higher level of service . 2. The company should 1. recruit and promote service oriented candidates. 4. 3.CULTURAL INTEGRATION Most integration initiatives fall short of reaching their goals during implementation stage and follow-up.

STRATEGIES FOR MANAGING HUMAN RESOURCE IN M&A • Communication • Common culture • Training and development • Mutual respect • Individual counseling .

hold proximity meetings.Regular conference calls with CEO’s. send out news up-dates. .Between different cultures and time zones . etc. management and employees.CULTURAL PROBLEMS ADDRESSED • COMMUNICATION .Internal communications play a very important role .

Introduced a range or measures to avoid forced redundancies to date. .Launched Group-wide VRS and early retirement programmes.Flexible rotating work schedules at various sites. . .CULTURAL PROBLEMS ADDRESSED • AVOID REDUNDANCIES .

.Necessary measures.Employees affected will be taken care of in the most socially sensitive way possible in-line with economic employment legislation. .Voluntary salary cuts at management level. where the company continues to take responsibility.CULTURAL PROBLEMS ADDRESSED • THE MONEY PART . .

5% .7% .Net profit decreased by 10% • 2009 .Sales increased by 10% .Sales decreased by 47.Net profit decreased by 98.Sales increased by 11% .THE VISIBLE DEATH! (FINANCIALS) • 2007 .Net profit increased by nearly 30% • 2008 .

stepped down from ArcelorMittal's Board. indifference to employees.BAD TO WORSE!! Malay Mukherjee. no effort to put down strikes. a former SAIL executive. opposing the measures taken by Arcelor Mittal. massive lock-outs. . no effort to reduce pollution.

• The Dutch were work oriented – Low cost operations was their strength. higher you are placed in the hierarchy. . • In France. more tensed is the atmosphere.THE DUTCH Vs THE FRENCH • Strike is a typical French corporate practice. the Dutch adapt and go ahead.

• For the Dutch performance mattered – while for the French their pride mattered-ARCELOR. . • Arcelor had high end customers while Mittal dealt with the low end customer base. but spend on average less time at their offices or workplaces in general.THE DUTCH Vs THE FRENCH • The French are more stressed. the largest turnover company in Steel.

identify cultural barriers. • Establish ‘bridges’ between both companies. • Establish a basis and mechanisms for the new culture. • Decide which role the new culture shall play in the merged organization.MERGERS AND CORPORATE CULTURE • Develop a strategy for cultural integration • Analyze existing cultures . • Be patient People take time to be acquainted to a new cultural reality.CHECKLIST . . differences in communication and other potential problems.


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