Essay on Arcelor Mittal - a Take over Story

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Group 12

A rcelor-Mittal : A takeover story








8 December 2010

Group 12

1. Company Background
Mittal Steel Company was one of the world's largest steel producers by volume, and also one of the largest in turnover. CEO Lakshmi Mittal’s family owned 88% of the company. Mittal
Steel was based in Rotterdam but, managed from London. It was formed when Ispat
International N.V. acquired LNM Holdings N.V. (both were already controlled by Lakshmi Mittal) and merged with International Steel Group Inc. in 2004. On 25 June 2006, Mittal Steel merged with
Arcelor. The merger has been successfully approved by shareholders and directors of
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Arcelor’s core areas were flat carbon steel, long carbon steel, stainless steel and steel solutions and services. For Mittal Steel, the acquisition of Arcelor would result in product diversity and greater emphasis of its size and scale. The vertical integration element was not yet present; however, Lakshmi Mittal’s plan did not end with the acquisition of Arcelor: it was merely one of the key cogs of the bigger wheel.
3. The strategy underlying the merger
The reasons for a merger and its implementation are always intertwined. For example, a horizontal integration will most likely result in redundancy and, thus, in lay-offs; whereas a firm acquired to diversify a company’s activities is more likely to remain unscathed if it was performing well before the merger. In the following paragraphs, we will try to understand why Mittal Steel launched a takeover bid on Arcelor, and that analysis should help us to explain the measures taken by Mittal Steel in regards to its human resource management.
The first thing we should be aware of is the economic context. Since 2003, commodities markets are soaring thanks to China’s incredible growth. Steel industry’s annual growth is close to three to four percent, rates that were forgotten since the 1973 oil crisis. This growth has allowed many players in the industry to quickly reduce their debts, including Mittal

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