Reference To Case Study Associated With Arcelor Mittal

Running head: REFERENCE TO CASE STUDY ASSOCIATED WITH ARCELOR AND MITTAL
Reference to Case Study associated with Arcelor and Mittal
Name of the Student:
Name of the University:
Author’s Note:

1REFERENCE TO CASE STUDY ASSOCIATED WITH ARCELOR AND MITTAL
Table of Contents
Introduction................................................................................................................................2
Discussion..................................................................................................................................2
Conclusion..................................................................................................................................8
Reference List............................................................................................................................9

2REFERENCE TO CASE STUDY ASSOCIATED WITH ARCELOR AND MITTAL
Introduction
ArcelorMittal is basically a successor company to Mittal Steel, a steel manufacturing
company that was founded in the year 1976 by a renowned businessman Mr Lakshmi N
Mittal who played a significant role as chief executive officer as well as he was a chairman of
a board comprising of company directors. Arcelor as well as Mittal Steel merged together to
form ArcelorMittal in the financial year 2006 (Cygler, Gajdzik and Sroka, 2014). Since
Mittal Steel underwent significant growth in terms of business operations from the year 1989
therefore it resulted into merger of two companies that incorporated several strategies
associated with consolidation along with good number of acquisitions. The current report
discusses about various benefits and losses incurred by the companies after formation of
collaboration as well as modification in the structure of organization. It also discusses certain
negative as well as positive impacts due to effectiveness of Mittal Steel as reviewed from the
article Financial Times.
Discussion
1. Assessment of post-merger structure of board and various pros as well as cons
before reviewing the article for Financial Times
The structure of post-merger board is made up of 18 power members including Joseph
Kinsch who was basically the chairman of the company Arcelor before it merged with
Mittal steel, president of Mittal steel, Lakshmi Mittal, there are nine directors of the
Company that also includes representatives of employees as well as nominee directors
who take care of demands of shareholders of the Company. The Board associated with
General Management is under the chairmanship of Roland Junck who is the CEO at
present and Aditya Mittal, the son of Mittal Steel Company director (Haider, 2014). As a
result of this merger as well as acquisition, steelmakers today have decided to achieve

3REFERENCE TO CASE STUDY ASSOCIATED WITH ARCELOR AND MITTAL
two goals that are mainly purchasing of additional capacity in terms of production and
they want to improve their cost framework as well as increase value of shares present in
the market. As a result of merging, it is now able to produce output that is almost four
times that of biggest firms in Steel Industry that is Nippon Steel and almost eight times
more than that of SAIL that is the one of the largest steel manufacturers. On the basis of
leadership quality and due to actions planned by post-merger structure of board it can be
stated that 35% of the world’s steel production will come from ArcelorMittal in coming
10 years. Strategies towards consolidation of firms Arcelor as well as Mittal steel shall be
driven through various fits that would help to secure deals that would be financially-
centred in years to come. The company has shown rapid progress since 2006 in terms of
wide availability of raw materials, good capacities towards production, implementation of
new technologies or patenting the existing ones and has facilitated large global supply in
the market both domestic as well as international.
It is expected that small scale industries that are concerned with steel production may
undergo merge with big steel producers like ArcelorMittal that has 20 million tonnes of
productivity every year with an approximate market share of 51% as they want to
improve their place in the market by getting availability towards good quality raw
materials. The Company has now reports of operating income of approximately $12
billion every financial year (Tirian et al. 2017).
However due to rising of certain problems in the year 2008 in December, the merger
Company declared for closing various plants like Steel Plant of Bethlehem in
Lackawanna in New York as there was a conflict due to buying of properties at
Kryvorizhstal that led to increased rate of employee turnover that reduced from 57000 to
30,000 in that year. In the financial year 2010, the firm suffered due to falling of
operating income up to $4.9 billion and sales of goods also fell at a rate of 10%. The

4REFERENCE TO CASE STUDY ASSOCIATED WITH ARCELOR AND MITTAL
Company started to curtail the production of European steel in order to bridge the
reduction in demand for item steel. The firm took an initiative of signing an agreement of
approximate $2.2 billion in order to build an iron ore in Senegal however it failed to
undertake the project as it was not possible for them due to lack of sufficient resources to
build a constructional line for railways of 750 km. These threats aroused mainly because
of differences in thoughts between the two families: Arcelor who was the steelmaker
from Europe and Mittal Family from Indian society. Even the politicians from Europe
also complained against this merger as Mittal always maintained mum and there were
constant protection barriers that occurred due to acquisition of Mittal’s shares by Arcelor.
2. Due to retaining of vote equity of 43.5% by Mittal family, is it possible that an
institutional investor would make remarkable contribution towards governance
associated with company
Mittal family has been able to retain 43.5% of equity associated with voting that included
rights of various combined groups. Chairman Joseph Kinsch declared that they had
readily accepted offers of Mittal Steel as it would be profitable for their industry as well
as for shareholders or institutional investors who would perform towards making
expandable contributions for improving the governance as well as infrastructure. Mittal
has been successful in putting forward a revised offer that constituted 82% premium over
the price of deal and it was a high time for Arcelor to accept the offer during the World
famous Trading Day. This offer contain innumerable opportunities as shareholders of
Company Arcelor would be receiving 13 shares of Mittal and cost of 150.6 euros in the
form of cash would be available to 12 shareholders. Through this entity, Mittal promised
to give an annual production of 120 million capacity tonnes of steel at global level that
would generate a revenue of 71.9 billion of dollar and a market capitalisation 49 billion
dollar that easily would attract many investors. As because the company accepted to

5REFERENCE TO CASE STUDY ASSOCIATED WITH ARCELOR AND MITTAL
undertake various transformational changes in coming future therefore looking forward to
this sustainability many stakeholders would come forward to contribute a remarkable
amount of money capital that would help to build infrastructure projects in coming years.
This would help to improve governance structure and will allow the Company to expand
their business across overseas, places which have not undergone much prospects in the
field of manufacturing and utilization of steel products (Corporate.arcelormittal.com,
2019).
3. Reviewing Financial Times article
On reviewing the article produced in Financial Times with respect to ArcelorMittal, the
merger industry that is a leading manufacturer of steel was in an attempt to defend itself
against the high bidding of shares from the rival company Mittal steel as it has been
mentioned by John Plender. Various shareholders have opposed to the fact and they
passed their votes against this rising issue by maintaining a firm stand in the Company of
Arcelor. There had been rising issues associated with governance and most of the
shareholders took the side of Mittal steel. Mittal Steel was a Dutch based firm that has
been listed on the template of Euronext in the region of Amsterdam as well as in the stock
exchange department of New York is run under the guidance of Lakshmi Mittal and his
family. The bid approximated of an amount that is almost 75% of the property rights
therefore corporate governance came into a crucial role due to these outcomes. There had
been a rumour regarding voluminous fillings of Mittal Steel associated with securities in
US as well as Exchange Commission that it would lead to disclosure of governance laws
in their websites however Mittal assured the fact that this takeover of business of Arcelor
would preserve every rules as well as regulations and there is no need for investors of the
Company to worry about it. It is also reviewed from this news article that there exist a
large number of directors of Steel industries who have close business relationship with

6REFERENCE TO CASE STUDY ASSOCIATED WITH ARCELOR AND MITTAL
Mr Mittal therefore he has the authority to exercise certain powers that would be legally
constituted by major members of Steel Industry. However through an improvement in
terms of control over bid would help to reduce his power of control by an amount of 50%
(Corporate.arcelormittal.com, 2019).
Mittal Steel was in demand for voting structure that would be entirely two-tier based. He
decided to own 67.2% over A shares that carried one vote and the rest of B shares
constituted 10 number of votes. All-over Mittal family had a control over 98.3% of votes.
He stated that there would be a change from voting to shares of non-voting from 10:1
ratio to that of 2:1 ratio (Pozniak, 2015).
A change in ratio would come to a little effect as powers are conferred due to
shareholders in association with articles of Mittal steel that he would hold an important
position as long as he holds a significant majority in voting. Shareholders can take a
remarkable hold over the investment of the Company that would control one out of
hundredth portion of company capital through the process of achieving permission by
putting an event in the agenda that is planned for general meeting of the Company
(Chaves et al. 2016). Directors of Mittal Steel have limitless potentials in terms of
exercising their power. An important of the article is that protection of individual rights
within the organization in terms of great concern towards integrity, transparency in the
form of accounts as well as arrangements required to be made for efficient governing
laws. This would help to preserve rights and provide various benefits to non-executive
directors and would act against rules in terms of interests associated with conflict. The
reason behind agreement to merge with Mittal Steel by Arcelor is because they have a
well-recognized board of directors, external operation units that always prove to be
successful in terms of administration and governance as well as its production capacity.

7REFERENCE TO CASE STUDY ASSOCIATED WITH ARCELOR AND MITTAL
4. Positive as well as negative impacts up on effectiveness associated with Mittal
Steel before merging as derived from article and comparison of effectiveness
associated with post-merger board
There were certain positive impacts on the pre-merger board of Mittal Steel who was one
of those large producers of steel in terms of volume and before merging with Arcelor the
Company used to hold 88% of shares among the firms in steel industry sector. When the
company bid quite a large amount of 18.6 billion Euro for Arcelor Steel, the structure of
the organization faced hostile response from the management board of Company Arcelor.
Certain threats had to be undergone by Mittal Steel as Arcelor declared that they had
already acquired large dividends and had a very positive report on profits earned by the
Company (SZMAL, 2014). However those information were proved to be false and the
Company attempted to manipulate some illegal tactics as well as strategies in the social
environment to keep away Mittal Steel out of premises. There were further opposition
from the side of European politicians as they declared Mittal Steel to be 150% hostile
with their bid that had a negative impact on pre-merger board of the Company. There
were positive impacts as there were certain auditing sessions when Narayan Vaghul who
was the chairman of a renowned bank in India ICICI bank was on the side of Mr Mittal
and other persons like Andres Rozental who was a Mexican diplomat always supported
Mittal Steel because of its name all around the world. Since the Company was always on
the process of open communication with his fellow members and staff therefore it always
have the chances to rectify itself on various grounds instead of turning the situations to
become more complicated. After undergoing merging with Arcelor it has been able to
generate subsequent production and helped to achieve the name of best Company in terms
of earning profits and serving good quality products.

8REFERENCE TO CASE STUDY ASSOCIATED WITH ARCELOR AND MITTAL
Conclusion
Therefore from the above discussion it can be concluded that through merger as well as
acquisition of two different companies like Arcelor and Mittal it has been made possible to
combine their different assets as well as various operations shall run under single overarching
company. This would help in taking necessary steps as well as initiatives towards future
prospectus by a greater number of decision makers instead of holding the responsibility to
take decisions by individual companies that often result in failure of plans or projects. Good
planning development, proper and efficient utilization of iron ore resources would help in
establishing several projects and this would contribute towards building infrastructure for
other companies that would like to undergo merger as well as acquisition program in future.

9REFERENCE TO CASE STUDY ASSOCIATED WITH ARCELOR AND MITTAL
Reference List
Cygler, J., Gajdzik, B. and Sroka, W., 2014. Coopetition as a development stimulator of
enterprises in the networked steel sector. Metalurgija, 53(3), pp.383-386. DOI:
10.9774/GLEAF.3062.2000.su.00003
Haider, H., 2014. Transnational transitional justice and reconciliation: The participation of
conflict-generated diasporas in addressing the legacies of mass violence. Journal of
Refugee Studies, 27(2), pp.207-233. DOI: 10.1093/jrs/feu002
Tirian, G.O., Gheorghiu, C.A., Hepuţ, T. and Chioncel, C., 2017, May. Control system of
water flow and casting speed in continuous steel casting. In IOP Conference Series:
Materials Science and Engineering (Vol. 200, No. 1, p. 012047). IOP Publishing.
DOI: 0.1088/1757-899X/200/1/012047
SZMAL, A., 2014. The competitive challenges for the Polish steel industry. In METAL 2014.
23rd International Conference on Metallurgy and Materials (pp. 1914-1919). DOI:
10.13140/2.1.1760.3208
Cruz-Gandarilla, F., Salcedo-Garrido, A.M., Avalos, M., Bolmaro, R., Baudin, T., Cabañas-
Moreno, J.G. and Dorantes-Rosales, H.J., 2015. EBSD characterization of an IF steel
processed by Accumulative Roll Bonding. In IOP Conference Series: Materials
Science and Engineering (Vol. 82, No. 1, p. 012077). IOP Publishing. DOI:
10.1088/1757-899X/82/1/012077

10REFERENCE TO CASE STUDY ASSOCIATED WITH ARCELOR AND MITTAL
Olufemi, A.C., Bello, P.O. and Mji, A., 2018. Conflict implications of coal mining and
environmental pollution in South Africa: Lessons from Niger Delta, Nigeria. African
Journal on Conflict Resolution, 18(1), pp.7-35.
Pozniak, K., 2015. A model socialist steel town enters the neoliberal age: The changing
political economy of Nowa Huta, Poland. Economic Anthropology, 2(1), pp.63-83.
Corporate.arcelormittal.com (2019). Home – ArcelorMittal. [online]
Corporate.arcelormittal.com. Available at: https://corporate.arcelormittal.com/
[Accessed 20 Aug. 2019].