Mergers, Acquisitions and Takeovers Case Study

Mittal Steel's Bid for Arcelor : Coming together of Equals or Making of an Unequal?

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Abstract:
Mittal Steel became the world's largest manufacturer of steel with operations in North America, Africa, Central and East Europe, by buying a network of loss-making state-owned steel mills in former communist countries including Kazakhstan, Romania and Ukraine and turning them around. In January 2006, Mittal Steel made €18.6 billion ($22 billion) hostile takeover bid for Arcelor, the No. 2 steel producer in the world, with an aim to create a steel giant with a capacity of 115 million tonnes, larger than the next three largest steel makers -- JFE Holdings, Nippon Steel and Posco's capacity put together. The deal was rejected outright by the Arcelor Board and there were mixed reactions from the industry and governments of various countries as well regarding the takeover bid.

Pedagogical Objectives:

• To chart the making of Mittal Steel, highlighting its course of action to become the biggest steel producer in the world
• To discuss the reasons and rationale behind Mittal's bid for Arcelor
• To discuss whether the merger of the two companies, would bring an end to the deep cyclical peaks and troughs in steel supply and prices
• To discuss the role and influence of various governments in this deal.

Keywords : Mergers,Acquisitions,Alliances Case Study;Lakshmi Mittal; Mergers and acquisitions; Hostile takeover; Consolidation; Steel industry; Economies of scale; Merger synergies; Thwart acquisition bid; Cultural differences in merger; Political intervention in business; Consolidation of industry and its effect on prices.

Contents : 
Making of Mittal Steel
Acquisitions Made by Mittal Steel
Mittal Steel - Major Operating Facilities
The Takeover Bid
Estimated Financial Synergies in Mittal-Arcelor Deal
Combined Operations of the Two Companies
Iron Ore Self Sufficiency
Coming Together of Equals or Making of an Unequal?