MERGER OF ARCELOR STEEL AND MITTAL STEEL
MERGER OF ARCELOR STEELAND MITTAL STEEL
Steel Industry – An Overiew
Steel is the world’s third largest commodity
World production1.244 bn metric tons in 2005-06
Average growth rate per annum in 2005-06 was 9% and that over 2000 to 2005 being 6.1%
World production1.3 bn metric tons in 2007-08
Type Public
Industry Steel
Successor(s) ArcelorMittal
Founded1976 in Calcutta, India, 1989 as Ispat International in Sumatra, Indonesia
Headquarters Rotterdam, Netherlands
Key people Lakshmi Mittal, Founder, Chairman and CEO
ProductsSteel, Flat Steel products, Coated Steel, Tubes and Pipes
Revenue $28.132 billion USD Year to 31 Dec 2005
Operating income $4.746 billion (2005)
Net income $3.365 billion (2005)
Employees 320,000 (2006)
Website Mittal Steel
Mittal Steel Company was formed by the merger of
• LNM holdings & ISPAT International
• International Steel Group Inc.
CEO Lakshmi Mittal’s family owned 88% of the company and its headquarter was in Rotterdam, Netherlands
The company was the world’s largest steel producer by volume and also the largest in turnover and is now a part of ArcelorMittal
It was the major player in Steel, Flat Steel products, Coated Steel, Tubes and Pipes
Mittal Steel Growth Timeline
1989: Acquisition of Iron & Steel Company of Trinidad & Tobago
1992: Acquisition of Sibalsa 1994: Acquisition of Sidbec-Dosco1995: Acquisition of Hamburger Stahlwerke > Ispat International Ltd. and Ispat Shipping
formed > Acquisition of Karmet 1997: Ispat International NV goes public 1998: Acquisition of Inland Steel Company 1999: Acquisition of Unimétal 2001: Acquisition of ALFASID > Acquisition of
Sidex
2002: Business assistance agreement signed with Iscor 2003: Acquisition of Nova Hut 2004: Acquisition of Polski Huty Stali > Acquisition of BH Steel > Acquisition of Macedonian facilities from Balkan Steel > Creation of Mittal Steel and proposed acquisition of International Steel 2005: Acquisition of a stake in Hunan Valin > ISG Acquisition completed > Mittal Steel Europe created > Mittal Steel makes Fortune 500 list of top companies> MDA with Liberian government > Acquisition of Kryvorizhstal > MoU with State of Jharkhand, India > Acquisition of Stelco subsidiaries > Stake lifted in Mittal Steel Zenica
Type Société Anonyme
Industry Steel
Fate merged with Mittal Steel
Predecessor(s)
Arbed (1911)Aceralia (1902)Usinor (1948)
Successor(s) ArcelorMittal (2006)
Founded 18 February 2002
Headquarters Luxembourg City, Luxembourg
Products Steel
Revenue € 32.611 billion (2005)
Employees 94,000[when?]
Website www.arcelor.com
•Arcelor S.A. was the world's largest steel producer in terms of turnover and the second largest in terms of steel output, with a turnover of €30.2 billion and shipments of 45 million metric tons of steel in 2004.
• Employing 4,10,000 employees in over 60 countries, it is a major player in all its main markets: automotive, construction, metal processing, primary transformation, household appliances, and packaging, as well as general industry.
• With total sales of over €30 billion, Arcelor was the world's largest steel manufacturer in terms of turnover. •It produces long steel products, flat steel products and inox-steel.
Financial Position in 2005COMPANY MITTAL
ARCELOR2005 Sales $28.10
$38.84
1-Year Sales Growth 27% 8%
2005 Net Income $3.37 $4.58
1-Year Net Income Growth -28% 66%
Employees 175,000 96,000
Type Public
Founded 2006
HeadquartersAvenue de la Liberté, Luxembourg, Luxembourg
Area served Worldwide
Key peopleLakshmi Mittal (Chairman of the board and CEO)Aditya Mittal (CFO)
Industry Steel
ProductsSteel, flat steel products, long steel products, stainless steel, wire solutions, plates
Revenue US $124.9 billion (2008)
Operating income ▲ US $12.24 billion (2008)
Profit ▲ US $9.399 billion (2008)
Total assets US $133.1 billion (2008)
Total equity US $59.23 billion (2008)
Employees 315,900 (2008)
ARCELOR MITTAL
Arcelor Mittal is now the largest steel company in the world
ArcelorMittal is the leader in major global markets, including automotive, construction, household appliances & packaging
The company is headquartered in southern Luxembourg City, the former seat of Arcelor
Lakshmi Mittal (owner of Mittal Steel), a non-resident Indian is the Chairman and CEO
Headquarters at Luxembourg city
It employs 4,10,000 employees in more than 60 countries
ArcelorMittal key financials for 2007 show revenues of US$ 105.2 billion
A crude steel production of 116 million tones, representing around 10% of world steel output
As of May 17 2008, the market capitalization of ArcelorMittal was $144.37 billion
THE DEAL
INITIAL BIDJanuary 14: Mittal talked to Arcelor CEO
about the deal.January 27: Mittal steel launches a bid of $
22 billion. January 29: Arcelor rejected the offer.
HOSTILITY AND RACISMhostility by Arcelor’s Management Board racial discrimination
The CEO of Arcelor dismissed Mittal Steel as a “company of Indians”
Increasing Offers and PressureApril 19: Chief Executive Lakshmi Mittal
calls Arcelor Chairman Joseph Kinsch to ask for "friendly discussions''
April 28 : "significant corporate governance changes'' and revise the offer.
May 4: Kinsch says the offer is "wholly inadequate''
May 9: Mittal Steel is ready to revise the offer and make corporate governance changes"
May 18: Mittal formally launches its offer.
SEVERSTAL – A NEW PLAYERMay 26: Arcelor announces a deal with
Severstal June 2: European Union antitrust regulators
approve Mittal bid on condition.June 6: The European Commission approved
the Mittal-Arcelor merger June 12: Arcelor rejects Mittal revised bid and
recommends shareholders accept deal with Severstal.
June 20: In a bid to woo Arcelor, Severstal revised the terms of its merger proposal
AGREEMENT TO MERGER AND FINAL MERGERJune 19: Arcelor cancels shareholder meeting
on share buyback June 21: Market regulators want more clarity
on the state of talks with Mittal and Severstal June 25: Arcelor's board agrees to sweetened
bid from Mittal worth about $32.3 billion.June 30: 57.95% per cent of Arcelor
shareholders voted against the Severstal offer. They accepted Mittal Steel's $32.3 billion offer
AGREEMENT TO MERGER AND FINAL MERGERJune 19: Arcelor cancels shareholder meeting
on share buyback June 21: Market regulators want more clarity
on the state of talks with Mittal and Severstal June 25: Arcelor's board agrees to sweetened
bid from Mittal worth about $32.3 billion.June 30: 57.95% per cent of Arcelor
shareholders voted against the Severstal offer. They accepted Mittal Steel's $32.3 billion offer
Terms Laid Down By Arcelor
New company to be called Arcelor-Mittal, and not Mittal-Arcelor
Majority of board members will be from Arcelor despite Mittal’s high stake
The company will be headquartered in Luxembourg
LN Mittal will be co-chairman along with Arcelor chairman Joseph Kinsch
Merger Process
2 step process First step-Mittal Steel was merged into a ad hoc
subsidiary named ArcelorMittal Second step-ArcelorMittal was merged into
Arcelor, which was renamed ArcelorMittal
Corporate Structure: Arcelor
Calculation of the Indirect
Valuation of Arcelor Brasil
1. Determination of Arcelor Brasil’s Proportionate EBITDA contribution to Arcelor’s EBITDA
2. Determination of Arcelor Brasil enterprise value implied by Mittal Steel offer for Arcelor
3. Calculation of Arcelor Brasil MTO Reference Value per Share
Post Merger
Arcelor + Mittal = ArcelorMittal
Building our Company with the needs of future generations in mind
Market Position By Region
Operations in more than 20 Countries.Annual production capacity of 130 million tonnesProduced over 116 million tonnes of steel.Steel shipments totaled approx. 110 million tonnesGenerated revenues of US$ 105.2 billion.Announced 35 more acquisitions.Organic growth of 20 million tonnes.Unique R&D capability in the steel industry
PostMerger
Overview
Industry leader
Geographically diversified
EBITDA split by geography
Cost leadership
No 1 in automotive steel
As Per Today's Standing in NYSE Market
14.44 0.54(3.60%) Sep 28 – Market Price on Closing of Day
Market Cap: 22.37BP/E (ttm): 121.34EPS (ttm): 0.12Div & Yield: 0.64 (4.20%)Market Price fluctuation From 2008 up till
today's date
ConclusionLargest global player
Smoothen out the price fluctuations
Created a much stronger and more sustainable business
Clear strategy to deliver further growth and value creation
how the “impossible” Arcelor-Mittal merger became possible.
Thank You