Ispat International: Consolidating European Operations
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Case Details:
Case Code : BSTA134
Case Length : 12 Pages
Period : -
Organization : -
Pub Date : 2005
Teaching Note :Not Available
Countries : -
Industry : -
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Excerpts
About Ispat
In 2000, Ispat's integrated mini-mills were the largest producer of direct reduced iron (DRI) in the world. Ispat had significant strategic interests in iron ore mines, pelletizing facilities and deep-water port facilities...
Ispat Hamburger Stahlwerke
HSW was Germany's fourth largest producer of wire rods. Acknowledged as a global leader in the integrated mini-mill process, it was also a pioneer in areas such as melt shop productivity and energy efficiency...
The Turnaround
After taking over the operations of HSW in January 1995, Ispat brought in S.D. Raman (Raman) as managing director for IHSW and four other expatriate managers
- the finance director, chief of marketing, chief of purchasing, and a cost controller...
Stahlwerk Ruhrort and Walzdraht Hochfeld
On October 1, 1997, Ispat International acquired Thyssen's Long Product Division in Germany, comprising Stahlwerk Ruhrort and Walzdraht Hochfeld for $68 million...
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A New Challenge at Irish Steel
Soon after its foray in Germany, Mittal started looking around to acquire additional facilities in Western Europe. He decided against pursuing a greenfield project, because he found it cheaper to acquire a loss making facility and turn it around than set up a greenfield project. One of Ispat's first opportunities was the state-owned Irish Steel in Cork, Ireland...
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The Unimetal Acquisition
Ispat continued its worldwide expansion in 1999 when it finalized another acquisition as part of its strategy to become a major producer of long products in the European Union. On June 1st, 1999, Ispat agreed to purchase Unimetal, Trefileurope, and Societe Metallurgique de Revigny from French steelmaker Usinor...
Conclusion
In late 1999, Ispat finally acquired HSW (effective January 1, 1995). Ispat also agreed to take a loan payable from HSW to a bank with a face value of $99 for $39, which was paid in cash during 1996. Ispat International recorded a negative goodwill of $25million in its 1999 balance sheet...
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Exhibits
Exhibit 1: Mittal Steel in Europe
Exhibit 2: Sales by Geographic Region
Exhibit 3: Mittal Steel Growth Timeline
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