Report On Arcelor- Mittal Merger

“A Union of Titans”

Submitted By: Divya khemani (08-111-819)

BACKGROUND

MITTAL STEEL

Mittal Steel is the world's largest and most global steel company, with shipments of 49.2 million tons and revenues of over $28.1 billion in 2005. They own steel-making facilities in 16 countries, spanning four continents. They employ 224,000 people spanning 49 different nationalities. Their shares are listed on the New York and Amsterdam stock exchanges.

Mittal Steel has set the pace for the consolidation and globalization of the world steel industry. They have taken on a range of acquisitions, many of them formerly public sector-owned companies, and made successes of them. In the process they have spread best practice and modern production techniques throughout their plants. Their capital investment programme is unmatched in the industry.

Their 5000 strong customer base, spanning 150 countries, includes household names in the automotive, engineering and appliance sectors. A force in every segment of the steel market, Mittal Steel produces a broad range of high-quality finished and semi-finished products for the flat and long products markets.

Mittal Steel is among the most efficient steel producers in the world. They encompass all aspects of modern steelmaking, combining both integrated and mini-mill facilities and producing much of the iron ore and coking coal used in their furnaces. They are also among the most advanced steel makers, operating a range of modern technologies. They have pioneered the use of direct reduced iron (DRI) as a raw material source and are now the world’s biggest producer of DRI. With two technical research facilities, their product development teams are ready to meet the needs of the most demanding customers.

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 Rozental

Member of the Board of Directors

René Lopez Member of the Board of Directors

Muni Krishna T. Reddy Member of the Board of Directors

Lewis B. Kaden Member of the Board of Directors

Vanisha Mittal Bhatia Member of the Board of Directors

LAKSHMI N. MITTAL – PROFILE

Mr. Lakshmi N. Mittal is the Chairman and CEO of Mittal Steel Company. He founded the company in 1976 and has been responsible for the strategic direction and development of its businesses. Mittal Steel is the only truly global steel producer in the world with operations on 14 countries, spanning 4 continents. Mr. Mittal’s ability to guide the company in its identification, acquisition and turnaround of steel assets has led to its emergence as one of the world’s fastest growing steel producers. Mr. Mittal began his career working in the family’s steelmaking business in India, and has over 30 years of experience working in steel and related industries. Over the years, Mr. Mittal has also championed the development of integrated mini-mills and the use of Direct Reduced Iron or “DRI” as a scrap substitute for steelmaking and led the consolidation process of the global steel industry. Other related activities of Mittal Steel include shipping, power generation and distribution, and mining.

Following the transaction combining Ispat International and LNM Holdings to form Mittal Steel in December 2004, together with the simultaneous announcement of the acquisition of International Steel Group in the US to form the world’s largest steel producer, Mr. Mittal was awarded Fortune magazines “European Businessman of the Year 2004”. Previously, he was awarded “Steelmaker of the Year” in 1996 by New Steel in the USA, and the “Willy Korf Steel Vision Award” in June 1998, for outstanding vision, entrepreneurship, leadership and success in global steel development from American Metal Market and PaineWeber’s World Steel Dynamics.

Mr. Mittal is an active philanthropist and a member of various trusts. Mittal Steel is a significant contributor to local community and welfare activities for employees in countries where the Group operates. Mr. Mittal is a member of the Foreign Investment Council in Kazakhstan, the International Investment Council in South Africa, the World Economic Forum’s International Business Council and the International Iron and Steel Institute’s Executive Committee. He is a Director of ICICI Bank Limited and is on the Advisory Board of the Kellogg School of Management in the U.S.. He was born in Sadulpur in Rajasthan, India on June 15, 1950, and graduated from St. Xavier’s College in Calcutta where he received a Bachelor of Commerce degree. He is married to Usha Mittal, and has a son, Aditya Mittal and a daughter, Vanisha Mittal.

MITTAL STEEL GROWTH TIMELINE

Year Acquired Description

1989 Iron & Steel Company Of Trinidad & Tobago

A modern technologically advanced Steel Complex. Renamed as Caribbean Ispat.

1992 Sibalsa Mexico’s Third Largest Steel Producer. Renamed as Ispat Mexicana.

1994 Sidbec-Dosco Canada’s number four steel maker is bought from the Government of Quebec and renamed Ispat Sidbec.

1995 Hamburger Stalwerke

Karmet

Germany’s fourth largest producer of wire rod, renowned for its mini-mill expertise and renamed as Ispat Hamburger Stahlwerke.

The Group buys a 5.5 million tons pa blast furnace steel plant in Kazakhstan, renamed Ispat Karmet.

1998 Inland Steel Company

Ispat International buys America’s fourth largest steelmaker, Inland Steel Company and renames it Ispat Inland.

1999 Unimétal Ispat International buys the French company, Unimetal Group, including Trefileurope and SMR, from Usinor.

2001 ALFASID

SIDEX

LNM Holdings buys 70 per cent of ALFASID from the Algerian government and renames it Ispat Annaba.

LNM Holdings acquires SIDEX, an integrated steelworks in Galati, being privatized by the Romanian government. Renames it Ispat Sidex.

2002 Business assistance agreement signed with Iscor

LNM Holdings signs a business assistance agreement with the South African steel producer, Iscor. LNM subsequently takes control of Iscor in June 2004. Ispat Iscor has now been renamed Mittal Steel South Africa.

2003 Nova Hut LNM Holdings signs an agreement to buy Nova Hut, the largest steel producer in the Czech Republic, from the Czech government. The acquisition, at an all-in cost of $905 million, takes effect in January 2003 and the company is renamed Ispat Nova Hut.

2004 Polski Huty Stali

BH Steel

Macedonian facilities from Balkan Steel

Creation Of Mittal Steel and Proposed Acquisition Of International Steel.

LNM Holdings buys a controlling holding in Poland’s leading steel producer, Polskie Huty Stali, and renames it Ispat Polska Stal (IPS). The company boasts a capacity of over 6.5 million tons a year but is close to bankruptcy at the time of acquisition.

LNM Holdings buys Bosnia’s BH Steel, committing itself to the biggest ever investment in Bosnia by a foreign company.

LNM adds to its downstream activities in the Balkans with the acquisition of hot and cold rolling mills in Skopje, Macedonia. The two mills, dormant for two years, are renamed Ispat Skopje.

LNM Holdings and Ispat International announce their merger - to form Mittal Steel. At the same time, Mittal Steel announces an agreed takeover of International Steel Group of the US in a cash and shares deal worth $4.5 billion. Once the proposed acquisition is completed, it will create the world’s largest steel maker with a stock market worth of around $21 billion and a combined capacity of 70 million tons of steel a year. The enlarged Mittal Steel will span the globe with around 30 per cent of its assets in North America, 30 per cent in Europe and the remaining 40 per cent split between Asia and Africa. Chairman Lakshmi Mittal declares his intention to make the Group ‘the lowest cost steel producer in every market.’

2005 Acquisition of stake in Hunan Valin

ISG Acquisition Completed

Mittal Steel Europe Created

MDA with Liberian

Mittal Steel announces a share purchase agreement to acquire 36.67 per cent of Hunan Valin Steel Tube & Wire, one of China’s top ten steelmakers with annual capacity of 8.5 million tonnes. The move marks Mittal Steel’s entry into the Chinese steel industry.

The acquisition of ISG is completed and the company is merged with Mittal Steel’s existing US operation, Ispat Inland, and subsequently re-named Mittal Steel USA.

Mittal Steel restructures its European business, merging its western European operations with its central and eastern European operations to form one unified business structure – Mittal Steel Europe.

Mittal Steel signs a mining development agreement with

Govt.

Acquisition of Kryvorizhstal

MOU with Jharkhand, India

Acquisition of Stelco subsidiaries

the Government of Liberia, giving Mittal Steel access to about one billion tonnes of iron ore resources in the west of the country.

Kryvorizhstal is acquired for $4.8 billion following a public auction in Kiev. Kryvorizhstal is Ukraine’s leading steelmaker with annual steel production of 7.7 million tonnes and more than one billion tonnes of iron ore resources. Company subsequently renamed Mittal Steel Kryviy Rih.

Mittal Steel signs a Memorandum of Understanding with the State of Jharkhand, India. Mittal Steel expects to invest $9 billion establishing mining and steel making operations in the state.

Mittal Canada enters into definitive agreement for the acquisition of Norambar Inc., Stelfil Ltée and Stelwire Ltd. from Stelco Inc. Transaction completed in February 2006 at a cost of C$30 million

ARCELOR

Arcelor was created by the merger of Aceralia, Arbed and Usinor, and the determination of these three European groups to mobilise their technical, industrial, and commercial synergies in a joint venture to create a global leader with the ambition of becoming a major player in the steel industry.Officially launched on February 19, 2001, the merger became effective on February 18, 2002, when the Arcelor share was listed on several stock exchanges. The choice of the name Arcelor was announced on December 12, 2001.

ACERALIA

1902 : Creation of AHV

1950 : Creation of ENSIDESA

1973 : ENSIDESA (absorption of UNINSA)

1991 : Establishment of CORPORACION de la SIDERURGIA INTEGRAL

1994 : Establishment of CSI Corporacion Siderurgica, by utilizing the profitable assets of Corporacion de la Siderurgia Integral. Operations begin in 1995.1997 : Creation of ACERALIA CORPORACION SIDERURGICA and strategic alliance with the Arbed Group.

ARBED

1882 : Establishment of the parent company

1886 : Beginning of Thomas steel production in Luxembourg

1911 : Merger of the 3 largest steelmakers in Luxembourg and creation of Arbed

1920 : Creation of TradeARBED

1922 : Creation of Cia Siderurgica Belgo-Mineira in Brazil

1962 : Creation of SIDMAR in Belgium

1985 : Majority shareholding in ALZ through SIDMAR 1992 : Control is taken of the former Maxhütte (ex-GDR) and establishment of Stahlwerk Thüringen 1993 : Organization of the Group in business sectors

1993/97 : Conversion to electric steel production in Luxembourg

1995 : Majority shareholding in Klöckner Stahl, now STAHLwerke BREMEN

1997 : Strategic partnership with ACERALIA (formerly CSI) in Spain

1998 : Integration of ARISTRAIN in Spain - Majority shareholding in Belgo-Mineira

1999 : Takeover of UCIN in Spain 2000 : Sale of the shareholding in Samitri

USINOR

1948: Creation of Usinor, which takes over from Forges et Aciéries du Nord et de l'Est and Hauts Fourneaux, Forges et Aciéries de Denain-Anzin 1948 : Creation of Sollac, which takes over from the Lorraine steel industry

1964 : Creation of Sacilor, the origin of which dates back to the Wendel group

1981 : Nationalization of Usinor and Sacilor

1986 : Merger of Usinor and Sacilor 1990 : Sollac absorbed by Usinor

1991 : Ugine absorbed by Sacilor

1994 : Special steels grouped together within the Aster holding company

1995 : Privatization of Usinor-Sacilor

1997 : Usinor-Sacilor becomes Usinor

1998 : Acquisition of Cockerill-Sambre, owner of EKO Stahl

1999 : Re-organization of the Usinor group

BOARD OF DIRECTORS

Joseph Kinsch Chairman of the Board of Directors

José Ramón Álvarez Rendueles Vice-Chairman of the Board of Directors

H.R.H. Prince Guillaume of Luxembourg Director

John Castegnaro Director

Jean-Yves Durance Director

Noël Forgeard Director

Jean-Pierre Hansen Director

Ulrich Hartmann Director

Corporación JMAC BV represented by Antoine Spillmann

Director

Hedwig De Koker Director

Manuel Fernández López Director

Michel Marti Director

Daniel Melin Director

Edmond Pachura Director

Francisco Javier de la Riva Garriga Director

Sergio Silva de Freitas Director

Georges Schmit Director

Fernand Wagner Director

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 market sent Arcelor's Paris-listed shares soaring 29%, to EURO 28.6. Mittal shares listed in Amsterdam closed up 6.2%, at EURO 27.63. Steel shares around the world also rose.

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.

A tie-up between the two companies would create a company with $70 billion a year in revenue and the most global production capacity in the industry. Arcelor is primarily a European producer while Mittal is scattered around the globe.

The next largest producers after Mittal and Arcelor are Nippon Steel Corp and Posco.

Mittal would become the leader in providing steel to the automotive industry in Europe and the U.S., and would lead in the North American Free Trade Area in appliances and packaging.

HOSTILITY AND RACISM

There was a lot of hostility by Arcelor’s Management Board as they felt that Mittal Steel was resorting to underhanded techniques to merge with them. They dismissed the idea of a merger with a "company of Indians".

The European Union said it was against racial discrimination and the issue would be treated only on commercial considerations.

There was a lot of controversy where racist remarks were made against LN Mittal.

The bid stirred up passions amongst politicians, other leaders, and common man. With the European Commission being accused of protectionism and racism, Arcelor's CEO, Guy Dolle, offered a laundry list of ills in Mittal Steel because of which the merger should not take place.

In London, a columnist for The Guardian spoke of how the bid unleashed a new wave of 'economic patriotism,' adding that Mittal and his family were often portrayed as aliens -- 'the Indians' -- rather than as global entrepreneurs.

INCREASING OFFERS AND PRESSURE

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

Severstal is a Russian company mainly operating in the steel industry, centered in the northern city of Cherepovets. As such it is the second largest steel company in Russia, behind Evraz Group. The company is owned by Alexei Mordashov.

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. Arcelor says the revised offer still undervalues the company and urges shareholders to support the Severstal merger instead, but mandates its board to explore possible improvements to the Mittal offer at a later date. 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 MERGER AND FINAL MERGER

June 19: Arcelor cancels shareholder meeting on share buyback amid growing shareholder opposition.

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.

June 24: Talks on between Mittal Steel and Arcelor

June 25: Arcelor's board agrees to sweetened bid from Mittal worth about $32.3 billion.

June 30: Paving the way for a merger between Arcelor and Mittal Steel, an overwhelming majority of shareholders of the Luxembourg-based firm vote down a merger proposal from Russia's Severstal.

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

In the process, they accept Mittal Steel's $32.3 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 $32.3 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.

Arcelor chairman Joseph Kinsch told shareholders that the long fight with Mittal was worth it, saying the India-born steel tycoon L N Mittal and the markets had finally recognised Arcelor's "true value."

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

SNAPSHOT VIEW OF THE MERGER

TRANSACTION HIGHLIGHTS

• Arcelor Mittal: A merger of equals with shared management forsuccessful integration– Ownership of 50.5% for Arcelor investors and 49.5% for MittalSteel investors

• Recommended transformational merger of the world’s two largest steelcompanies with unrivalled global footprint

• The undisputed industry leader

• Creation of company with unprecedented scale and diversification tomanage cyclicality, stabilize earnings and increase shareholder returns

• Annual synergies increased by 60% to €1.3bn (US$1.6bn)

THE COMBINED VISION

Combination driven by simple and compelling industrial logic, spurringconsolidation in a fragmented industry

Creation of European-based global champion best positioned tocapture new market opportunities

New entity will capitalise on strong European heritage and presence, aswell as leading position in North America

Enjoy unparalleled access to new high-growth markets: Central andEastern Europe, Africa, China and Latin America

Company will be able to service global customers with broad and deepproduct offering

High level of direct access to raw materials making group moreprofitable and less cyclical than most of its peers

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

A WIN-WIN TRANSACTION FOR ALL STAKEHOLDERS

From Mittal Point Of View

Merger would take consolidation to a new horizon. Successful distribution business in Europe. Mittal Co. to have leadership position in high end segments in Western

Europe with strong R&D capabilities. Low Cost slab manufacturing in Brazil that can be expanded for export to

Europe and North America. Increased free float and liquidity

From Arcelor Point Of View

Mittal Company will accomplish Arcelor’s stated plan in the most efficient way.

Arcelor becomes a global player. Operations in high-growth economies with low-cost, profitable assets and

local operating expertise in numerous emerging markets. Leadership position in high-end segments in North America, with strong R&D

capabilities. Access to very low cost slab potential in Ukraine to serve West Europe. Access to raw materials and upstream integration.

FINER DETAILS OF MERGER

Shareholder voting rightsAll shares with identical voting and economic rights: One share - one vote regardless of holding period

Composition of initial Board of Directorso Mr Kinsch to be Chairman, Mr Mittal to be Presidento Upon Mr Kinsch’s retirement, Mr Mittal becomes Chairmano The Board of Directors will be composed of 18 members, all non executive

(majority independent)• 6 members from Arcelor• 6 members from Mittal Steel• 3 current representatives of existing Arcelor major shareholders• 3 employee representatives

o After expiry of three year period, shareholders to elect Board of Directors

Board Committeeso an Audit Committee composed solely of independent directors

o an Appointments and Remuneration Committee composed of 4 members, including the Chairman, President and 2 independent directors

Composition of Management Boardo The Management Board will be comprised of 7 executive memberso 4 current Arcelor executives, CEO to be proposed by the Chairmano 3 Mittal Steel executives

KEY CONTRACT TERMS

Other offersArcelor has agreed they will accept no other offer for Arcelor shares unless it is asuperior offer for the entire share capital of Arcelor

o No break-up fee required in contracto If shares are issued under the Strategic Alliance Agreement, corporate

governance rules and certain other conditions terminate

StandstillMittal family has agreed to a standstill at 45% of share capital. Exceptions incertain circumstances - consent of a majority of the independent directors or incase of passive crossing of such thresholds

Lock upMittal family has agreed to a 5-year lock-up, subject to certain exceptions,including the right to dispose of up to 5% of the share capital after the 2nd year

INCREASED IDENTIFIED SYNERGIES

Marketing and trading (US$570m)

• Accelerated growth of distribution in developing regions e.g., CEE, CIS, Africa• Cross selling through enlarged and enhanced product portfolio• Optimisation of order book for cross product flows and logistical savings

Manufacturing and process optimization (US$470m)

• Benchmarking and best practice alignment across all operating assets• Optimisation of utilisation of assets through selected mill product specialisation(e.g., productivity gains with better sequencing rates, fewer changeovers)• Logistical and mill optimisation through transfers of semi finished products

Purchasing (US$500m)

• Scale effects on standardisation of procurement contracts• Optimisation and efficiencies from maintenance services, subcontracting, spareparts and consumables• Logistics savings on optimisation of raw material flows

SGA (US$60m)

• IT synergies• Reduction in external contracts e.g., consulting services• Duplication in commercial network avoided

UNMATCHED FINANCIAL STRENGTH

Arcelor Mittal pro-forma key financials Arcelor Mittal (US$bn)

Revenue 2005 US$77.4bn

EBITDA 2005 US$14.4bn

Margin (%) 18.6%

Net Debt Q1-06 * US$24.0bn

Gearing 56%

Net Debt / EBITDA 1.7x Cash flow from operations 2005 US$9.7bn

Capex 2005 US$4.1bn

Free cash flow 2005 US$5.6bn

FINANCIAL POLICY FOR SUSTAINABLE SHAREHOLDER VALUE CREATION

Efficient capital structure and return of excess cash to shareholders 30% dividend payout ratio over the cycle Unparalleled financial flexibility to pursue internal and external growth

opportunities Commitment to investment grade credit rating Maintain high returns on capital

CONCLUSION

The largest steel company in the world is created, a company larger than the next 3 largest steel companies combined. According to the press releases issued by the companies, “Consolidation creates value in the steel industry”.

Arcelor is the number 1 steel producer in the world by revenue. Mittal is the number 1 steel producer in the world by shipments.

• Both companies have been leaders in steel industry consolidation• Consolidation is contributing to increased discipline by producers• Combination of top two players takes consolidation to a new level

Arcelor is primarily a European player, while Mittal has interests all around the world. Together, they form

• World’s number 1 steel company• Leading positions in 5 major markets• 61 plants• 27 countries• Numerous international partnerships and Joint Ventures• Opportunity to grow in China and India

The new company is number 1 in North America, South America, Africa, Western Europe, Eastern Europe and CIS countries. A very vital omission from this list is Asia and more importantly, LN Mittal’s home country, India.

Why has LN Mittal not concentrated on India so far? One can speculate that he was going at it step by step, conquering the world markets one by one and now, only India is left.Till now, he has shown virtually no interest in the Indian market.

Recently, he has shown interest in investing large amounts of money in Jharkhand and Orissa, amounting to about Rs. 40,000 crore.Logically his next stop would be Asia, as China and India are the fastest growing steel consumption markets. In 2005, the US witnessed a 15.4% fall in consumption, and the fall in EU was 11.7%. Total global consumption still managed to rise 5.3%, thanks to a massive 25.9% rise in demand in China and an impressive 7-8% demand in India.

Some analysts say that Mittal had to pay a much higher price than was actually required to merge with Arcelor. He also did not get the best deal that he could have, as his controlling stake in the newly formed Arcelor-Mittal is lower than what was originally aimed for.

Mittal Steel is the world's largest steel producer at 70 million tonnes a year, almost double the world's second largest producer - Arcelor. October 2005 saw the first battle

between the big two- Mittal and Arcelor, both bid for Ukraine's largest steel mill - Kryvorizhstal in an open televised bid. Mittal beat Arcelor to the $4.8 billion deal, much more than the $3 billion at what analysts had valued Kryvorizhstal.  Reports suggest that it was this bidding war with Arcelor that gave L N Mittal's son Aditya, the CFO of Mittal Steel, the idea of taking over Arcelor. His reason was that it would eliminate any future messy battles.

Why was the deal so important for LN Mittal? In a snapshot, the Mittal-Arcelor combine would have an even larger share of the global steel market and would be able to get a better grip over steel pricing.

Severstal had to be paid legal fees as they had been completely cut out of the deal. Now Severstal has threatened a legal battle and a fresh bid. If that happens, the immediate future, at least, will not be glinting enough to Mittal’s advantage.

It has been a win-win transaction for both parties.

• Creating the undisputed leading global steel company• Growth and value creation opportunities maximised through uniqueglobal platform• Step change in steel industry consolidation• Significant synergy potential• Financial strength and strategic flexibility reinforced• Leadership in R&D/product development• Significant free float and liquidity• Re-rating potential• Positive for all stakeholders

In the end, a European company had to finally give in and merge with “a company of Indians”.

REFERENCES

http://www.mittalsteel.com/Company/History/

http://www.mittalsteel.com/Company/Profile.htm

http://www.mittalsteel.com/Company/Management/

http://www.mittalsteel.com/News+and+Press/Press+Conferences+and+Presentations.htm

http://www.arcelor.com/index.php?lang=en&page=77

http://sg.biz.yahoo.com/060127/15/3y9b5.html

http://www.nytimes.com/2006/06/26/business/worldbusiness/26arcelor.html?ex=1308974400&en=8abefaa34217bd6f&ei=5088&partner=rssnyt&emc=rss

http://economictimes.indiatimes.com/articleshow/1685717.cms

http://in.rediff.com/money/2006/feb/15msg1.htm

http://www.eitb24.com/portal/eitb24/noticia/en/business/factbox-timeline-of-mittals-takeover-bid-for-steel-rival-arcelor?itemId=D39695&cl=%2Feitb24%2Feconomia&idioma=en

http://www.blonnet.com/2006/06/26/stories/2006062603330100.htm

http://www.zeenews.com/articles.asp?rep=2&aid=304894&sid=BUS&ssid=53

http://www.stainless-steel-world.net/misc/ShowPage.aspx?pageID=664

http://in.rediff.com/money/2006/jun/30mittal.htm

http://in.rediff.com/money/2006/mar/08bspec.htm

Outlook Magazine – 10th July 2006 – Pages 46-48