Arcelor Mittal Controversy

November 23, 2006 at 9:24 am | Posted in Business, Indian Business | 41 Comments

ARCELOR- MITTAL CONTROVERSY               120px-arcelor_logo.gif100px-mittalsteel.gif

One of the most controversial business deals ever- the acquisition of Arcelor Steel by Mittal Steel led to the creation of Arcelor-Mittal, the largest steel maker in the world.

1. Background (before the deal)

Mittal Steel– the largest producer of steel in terms of volume. Despite the fact that Mittal steel is based in Netherlands, it is perceived that the company is non-European because its CEO Lakshmi Mittal is Indian.
Arcelor– Headquartered in Luxembourg, the merger of three steel companies- Aceralia, Arbed and Usinor led to the creation of Arcelor. In 2005, Arcelor had revenues of 32 billion Euros.

steel.JPG

2. The original bid

In January 2006, Mittal Steel launched a $22.7 billion offer to Arcelor’s shareholders. The deal was split between Mittal Shares (75 percent) and cash (25 percent). Under the offer, Arcelor shareholders would have received 4 Mittal Steel shares and 35 euros for every 5 Arcelor shares they held. (Ultimately the power to buy or sell the shares rests with the shareholder and the company management can at best advice its shareholders whether to accept or reject the bid)

3. Consolidation in the steel industry- inevitable:

steel-chart.gif

  • The steel industry is highly fragmented, the top 5 manufacturers in the steel industry account for less than 25 percent of the market (to put that in perspective, the corresponding figure for the automotive industry is 73 percent). LN Mittal believes that the consolidation will end with three of four major companies dominating the industry around 2010.
  • Bigger steel manufacturers have better bargaining powers against customers (such as as auto manufacturers) and against suppliers (iron ore).
  • Consolidation helps in comapnies improving their sourcing of raw materials; access to more markets, better utilization, more flexibility in production scheduling and better efficiency. Continue Reading Arcelor Mittal Controversy…
Advertisements

Purpose

November 7, 2006 at 4:21 pm | Posted in Blog | Leave a comment

A simple search for Kyoto Protocol results in Google listing over 3 million results. Now, somebody who is just looking to find out the most relevant information about the protocol, its impact and also the controversy is going to have a tough time in sorting through all these pages. And also the chance of all these aspects being addressed in one article is low. The probability of finding this article right away is lower. Excessive word counts and often-extraneous details make it nearly impossible for us to extract useful information. Even the basic information can be hard to glean when one is staring at an article that has over 100 lines.

This website aims to address this issue. Various topics will be taken up and explained in a very simple question and answer format. 8 Questions in all. These questions will address every aspect of the issue. Also, every entry will be followed by a series of links to articles for better insight into the topic.

Initially, the topics will be chosen on the basis of importance for the dreaded group discussions (GD) used for admission into India’s premier business schools such as the various Indian Institutes of Management (IIMs). Topics will be chosen from three broad areas- politics, business and economics. In the long run, topics will be chosen by demand and also from news which is hogging the deadlines. Maybe, even diversify into more fields such as technology and health.

If you have any topics to suggest or if you want to contribute please email 8questions@gmail.com

Create a free website or blog at WordPress.com.
Entries and comments feeds.