Corporate Governance Mittal Steel Article 2022

Running head: CORPORATE GOVERNANCE- MITTAL STEEL
CORPORATE GOVERNANCE- MITTAL STEEL
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CORPORATE GOVERNANCE- MITTAL STEEL1
Assess the post-merger board structure and discuss the pros and cons before reading
the Financial Times article.
Mergers and acquisitions are two terms that describe and define the consolidations
made between two companies or the assets through the processes of mergers, acquisitions, or
financial transactions. It can also be defined as a financial alliance between two companies
that come together to start a business in order to expand or grow in the market. The case
study include the merger between the Arcelor Mittal and the Mittal Steel have been an
industrial revolution. Since the merger, it is likely that there will be no unitary board of
directors, which refers to a single controlling board. In the newly merged company, there are
18 members, in the unitary board and all of them are acting as non- executive board of
directors, and independent, and is involved into the decision making process. The Mittal Steel
retained 43% of the voting rights, however, in the board there are six members from Mittal
steel and six from the Arcelor Mittal, working as per the provisions laid in the articles of the
association of the company. Therefore, the board of directors of the newly merged company
can be regarded as an example of a unitary board of directors, as all of the directors are non-
executive and are involved into the decision making process. Such a pattern of board of
directors are not
However, the merger process includes, both positive and negative impact upon the
companies and the society. The positive impacts or the advantageous positions of the merger
process are, very rare in case of a public organization, though, it can be found among the non-
profitable organizations, dealing into sports, trusts, charity and others. The structure
moreover, propounds the dominance of the Mittals in the decision making process in the
company’s governance.

CORPORATE GOVERNANCE- MITTAL STEEL2
Cost Efficiency. The merging between two companies result into cost cutting by both of the
companies. Since the organizations have the similar objectives and agendas now and since
both the organization will be spending on the project therefore, naturally, the organizations
can easily include a cost effective approach, as each of the industries have to spend equally,
that makes it half expenses for each of the companies (Frølich, and Caspersen. 2015).
New Markets. The merging between two companies can provide each of them new markets,
as both the companies can take a joint imitative, or if the companies belong to two different
fields, then to both of the companies, a new market is opened
Competitive Edge. The merging between the two organizations would provide both of the
organizations, new talents, financial stability and the ground to take new initiatives and risks.
Therefore, all these provides the organizations to gain a new competitive edge in the society
and in the market.
Synergy. The synergy, created because of the merging between the two companies, are more
potent than a single company, running a business. Therefore, this enhances the performances
of the companies and the increases the values of the shareholders as well (Lajoux. 2019).
The disadvantageous positions for the organizations include,
Reduction in Jobs. The merger between two companies involve in the reduction of jobs, as
the two companies are merging together, therefore, the employee strength is likely to get
increased, therefore, in certain cases it is seen that the companies bench some of the
employees in order to manage their employee cost.
Changed Pricing Structure. It is often seen that after a merger is made, the organizations,
increase the products of the prices. Therefore, it impacts upon the existing consumers of the
organizations and therefore, affect its loyal customer base. Also, the increased pricing
structure does not allow the organizations to increase its customer base