Presentation

MITTAL ACQUIRES ARCELOR – A BATTLE OF GLOBAL TITANS IN THE EUROPEAN MARKET FOR CORPORATE CONTROL

HISTORY OF MITTAL STEEL

The world's largest and most global steel company

Production 49.2 million tons & Revenues $28.1 billion in 2005

Operation in 16 countries They employ 224,000 people spanning

49 different nationalities 5000 strong customer base, spanning

150 countries

BOARD OF DIRECTORS

Lakshmi N. Mittal Chairman of the Board of Directors and Chief Executive officer

Aditya Mittal Member of the Board of Directors and President and Chief Financial Officer

Wilbur L. Ross Member of the Board of Directors

Narayanan Vaghul Member of the Board of Directors

Ambassador Andrés Member of the Board of Directors

René Lopez Member of the Board of Directors

Muni Krishna T. Reddy Member of the Board of Directors

MITTAL STEEL GROWTH TIMELINEYEAR ACQUIRED

1989 Iron & Steel Company of Trinidad & Tobago

1992 Sibalsa

1994 Sidbec-Dosco

1995 Hamburger Stalwerke, Karmet

1998 Inland Steel Company

1999 Unimétal

2001 ALFASID, SIDEX

2002 Business assistance agreement signed with Iscor

2003 Nova Hut

2004 Polski Huty Stali, BH Steel, Macedonian facilities from Balkan Steel,Creation Of Mittal, Steel and Proposed, Acquisition Of International Steel

2005 Acquisition of stake in Hunan Valin, ISG Acquisition Completed, Mittal Steel Europe Created, MDA with Liberian Govt., Acquisition of Kryvorizhstal, MOU with Jharkhand, India, Acquisition of StelcoSubsidiaries

Arcelor is formed by Arbed (Luxembourg), Aceralia (Spain) and Usinor (France) in 2001

Technical, Industrial, and Commercial synergies in a joint venture to create a global leader

Officially launched on February 19, 2001

Most of its 90 plants are in Europe but most of Mittal’s Plants are outside of Europe

BOARD OF DIRECTORS

Name Position

Joseph Kinsch Chairman of the Board of Directors

José Ramón Álvarez Rendueles

Vice-Chairman of the Board of Directors

John Castegnaro Directors

Jean-Yves Durance Directors

Jean-Pierre Hansen Directors

Noël Forgeard Directors

Ulrich Hartmann Directors

Daniel Melin Directors

Edmond Pachura Directors

THE INITIAL BID AND THE REJECTION

January 14: LN Mittal talked to Arcelor CEO Guy Dolle about the possibility of Mittal Steel acquiring Arcelor. Guy Dolle categorically turns Mittal down.

January 27: Mittal Steel launches a formal takeover bid for $22 billion dollars.

January 29: Arcelor rejected the offer and the French government said it has "great concerns" about the merger. Arcelor has plants in France.

THE WAR OF WORDS

Mittal said that Arcelor Chief Executive Guy Dolle wasn't positive about the approach, but he was confident Arcelor's shareholders will back the bid.

Mittal offered 27% premium over Arcelor’s share.

Guy Dolle said offer was inadequate and strategically unsound.

European politician supported Mr. Dolle. Luxembourg’s Prime minister said “ A

hostile bid calls for a hostile response”. They dismissed the idea of a merger with a

"company of Indians". There was a lot of controversy where racist

remarks were made against LN Mittal. Trade unions expressed concern about

potential job loss.

INCREASING OFFERS AND PRESSURE

4th Feb: Arcelor doubled its dividend & announce plans to buy back stocks of $8.75 billions at high price.

Change the law so that Mittal would be required to pay in cash.

18th Feb: Mittal said, if he’ll receiving more than half of the shares in initial bid then remaining share @ lower price.

April 19: Mittal Chairman and Chief Executive Lakshmi Mittal calls Arcelor Chairman Joseph Kinsch to ask for "friendly discussions'' about revising his proposal in return for support from management.

April 28: Mittal tells Kinsch he is ready to make "significant corporate governance changes'' and revise the offer.

May 4: Kinsch says the offer is "wholly inadequate'' and Arcelor has significant concerns about the real value of Mittal shares.

May 9: Mittal Steel says it is ready to revise the offer and make corporate governance changes "in the event of a recommended deal.'‘

May 10: Arcelor Chief Executive Guy Dolle describes as "insufficient'', Mittal's offer to revise its bid.

May 11: Arcelor says it has filed a lawsuit in the United States against Mittal for copying a type of steel for the auto industry.

May 12: Both companies announce better-than-expected results, although profits suffer due to higher costs of raw materials. Arcelor toughens its stance, announcing plan to spend up to $9.5 billion to buy back almost a quarter of its shares.

May 18: Mittal formally launches its offer. May 19: Mittal raises its offer by 34 percent,

bringing it up to $32.90 billion and says it would reduce the Mittal family's stake in the company.

SEVERSTAL – A NEW PLAYER

May 26: Arcelor announces a deal with Severstal that will give it a controlling stake in Russia's steelmaker and $16.4 billion for 32 percent of Arcelor.

June 2: European Union antitrust regulators approve Mittal bid on condition the new combined steel giant sell off some of its facilities if the bid succeeds.

June 6: The European Commission approved the Mittal-Arcelor merger. June 9: Arcelor confirms it has held talks with Mittal on the term of its bid. June 12: Arcelor rejects Mittal revised bid and recommends shareholders

accept deal with Severstal. Mittal says it won't budge on price, but is prepared to make changes

related to corporate governance. June 20: In a bid to woo Arcelor, Severstal revised the terms of its merger

proposal, saying that majority owner Mr Alexei Mordashov would settle for 25 per cent of the new group rather than the initially proposed 32.3 per cent and raised its offer by about 2 billion.

AGREEMENT TO FINAL MERGER

June 21: Market regulators in France, Spain, Luxembourg and Belgium suspend Arcelor shares, saying they want more clarity on the state of talks with Mittal and Severstal.

57.95% per cent of Arcelor shareholders voted against the Severstal offer.

June 24: Talks on between Mittal Steel and Arcelor

June 25: Arcelor's board agrees to sweetened bid from Mittal worth about $32.8 billion.

DEAL COMPLETED

In the process, they accept Mittal Steel's $32.8 billion offer, which was approved by the Board of Arcelor on June 25 after a five-month long battle.

Arcelor had recommended acceptance of share and cash from Mittal Steel valuing at about $32.8 billion, which creates a group with 3,20,000 employees producing about 116 million tonnes of steel annually, accounting for about 10% of the world market.

"We have created in five months more than EURO 12 billion in value," Kinsch said.

THE COMBINED STRATEGY

Consolidate regional high-end leadership into global customer platform

Achieve industrial excellence through state of the art assets sustained by sound capital expenditure and best in class R&D

Realise commercial leadership through strong distribution channels

Capture growth in BRICET countries, utilising existing leadership in high-end products in mature economies

Accelerate growth in key emerging markets such as India and China

Achieve cost leadership and operational excellence across product range

Maintain high level of vertical integration to hedge against raw materials price fluctuations

Focus on people management and social responsibility

World’s No.1 Steel Company

Present in more than 60 countries

Industrial presence in Europe, Asia, Africa and America

Corporate Headquarter :Lexumbourg

listed on NYSE, Amsterdam, Paris, Brussels, Luxembourg, Bilbao, Madrid.

Produces 120 mt of steel, representing 10% of the world steel output

ARCELORMITTAL

VISION and MISSION

Mission : Our mission is to provide complete steel foundation solutions to its customer on a worldwide basis.

Vision : Developing the skills of its employee is an integral part of the Arcelor Mittal , vision to be the most admired steel institution of the world.

BUSINESSES

Automotive• S-in Motion

Mining

Long

Flat

Stainless

COMPETITORSCompany Name

Arcelor Mittal Thyssenkrupp Nippon Steel Tata Steel

Rank In Fortune 500

28 74 157 258

Previous Rank in Fortune 500

39 89 165 315

No. of Employees

315867 199374 50077 84000

Revenues 124936 80210 47479 32018

Profits 9399 3295 1543 1075

Assets 133088 58490 49313 23968

Stakeholder’s Equity

55198 15460 17518 5462

Market Share 10 4 3 0.86

FINANCIAL ANALYSIS

QUESTIONS & ANSWER

Takeover Tactics By • Friendly merger,

• Hostile Tender offer ( 27% premium)

• Two tired offer: Second Tender offer ( Lower Price)

• Mittal raised bid to 34%

Defenses• Poison pills : Arcelor doubled its Dividend

•Buy back of $ 8.75 billion of stock

•Try to Changing in Law Suits

•Dutch Trust

• Sold 32% stake to Severstahl

Arcelor Shareholder Revolt

• Pressure to Talk with Mittal

• Opposition of Buy Back, as Severstahl stake was increasing to 38%

• Owning more than one third give’s Effective Control

Factor for & against of Hostile Takeover

Favourable to Hostile Takeover Against Hostile Takeover

Tender offer

Reaction of EU, Govt. Officials, Politician

Takeover Defences

friendly merger

Two Tired offer

Share Holder Pressure

Possible cause of Protection

• Management entrenchment Hypothesis

• Shareholders Interest hypothesis