Arcelor - Mittal Merger and Acquisition

Arcelor - Mittal Merger and Acquisition

2011-2012

Executive summary
This merger and acquisition transaction is about two large steel companies- one’s headquarter in Luxembourg and the other in the Netherlands. The target is Arcelor S.A, a big European company. And the acquirer is Mittal Steel Company, which was founded by Lakshmi Niwas Mittal. The negotiations began in January 27th 2006 when Mittal officially announced an offer to Arcelor’s shareholders. This was a hostile acquisition which faced many difficulties in respect to politics, and other economic aspects. The deal was reached on June 26th 2006 when Arcelor accepted the offer. Meanwhile the value of the acquisition was €26.5 billion; and the joining of the two big steel companies created the largest steel company in the world and created a lot of synergies after the its completion.
Introduction & Background
ArcelorMittal S.A. is the successor of Mittal Steel Company which was created through acquiring Arcelor S.A., the second largest steel producer after Mittal Steel, by Mittal Steel in 2006. It is the largest steel producing company in the world and one of the prominent multinational enterprises. The mighty steel empire was founded by Lakshmi Niwas Mittal in 1976 after purchasing the small plant in Indonesia. Lakshmi Niwas Mittal or 'King of Steel' built his empire without building a single steel plant. He expanded his steel business through various merger and acquisition activities. The detailed historical information for Mittal Steel can be seen on Exhibit 1-1.Arcelor S.A. was the pride of the European manufacture and steel industries and had the title for the100 most sustainable corporations in the World(Exhibit 1-2). They initially refused the bid from Mittal Steel but ended up being acquired after the generous offer by Mittal Steel.
Mittal Steel has three main motivations for acquiring Arcelor S.A. Firstly, acquiring firms in the same industry is the main expansion strategy for them. Its strategy depicts a horizontal method,...

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