ArecelorMittal Merger

ArecelorMittal Merger

Introduction

In today's economy, mergers and acquisitions are not hard to imagine. There are books have been written on this subject. Whether the theory in the literature actually absorbed in practice remains to be seen. The reason for this research is therefore the many mergers and acquisitions that take place today. Besides mergers and acquisitions within the bounds play companies broaden their boundaries literally and figuratively, this also includes the so-called cross-border mergers and acquisitions. The merger of Arcelor and Mittal yielded many controversies in the Western countries. ArcelorMittal takes number one steel producer, Mittal Steel's (hereinafter Mittal) and number two steel producer, Arcelor Steels (hereinafter Arcelor) together. In January 2006, Mittal, out of nowhere, came with a bid of $ 18.6 billion to take over Arcelor Steels. Its creation was important for many reasons, not the slightest was the sheer scale of merger. Driven by the vision of CEO and President Lakhsmi Mittal and unambiguously shaped, both parts were of general equal share that is why that deal made up the merger of equals. Both companies were comparatively new and the deal unusually, involved two firms whose market strengths and geographic were extremely opposite (DePamphilis, 2012).

Thesis Statement

“The primary challenge, behind the headlines is to incorporate the two entirely separate management and before that to convince them for that much heated merger, so is the case with ArcelorMittal merger.”

Purpose of paper

The purpose of this paper is to evaluate and analyze the process of merger and behaviors of both parties' management regarding this.

Overview of Paper

This paper focuses on the process through which the mergers happened and how share holders and managers influenced this process. It also talks about the defenses given by Arcelor for this merger and their analysis. The paper also gives a brief over view about how a merger can be hurdle for a new entry into the market.

Discussion

In a friendly takeover, the board of the target company first informed the acquirer, before they accept an offer. If the Board finds that the offer meets the requirements imposed by the shareholders they will accept the offer. For non-listed companies the shareholders are usually also on the board, whereby acquisitions almost always friendly in nature. If the board does not act according to the requirements of the shareholders, the acquirer pressure on the Board by the shareholders to convince that the acquisition is in their interest and that the board must be replaced. An acquisition can be characterized as hostile as the Board reject the bid but the acquirer and not specify another bid without the board to notify. That is why this merger is known as a hostile merger (DePamphilis, 2012).

Under a takeover defense means a strategy for the prevention of a hostile takeover. If a hostile takeover to succeed, the acquirer along the board directly to the shareholders should approach. So as to gain support from the shareholders to the board away and new shareholders vote to admit. Though Mittal initiated the merger offer in a friendly manner but after being publically denied, he deployed the two-tiered ...