Mittal's Issue

I just thought of writing a post on Mittal's issue...but I became lazy and thought of making it short:)

Whatz the issue?

As Mittal's mode of growth is through Acquiring companies, his company Mittal Steels, the world's largest steel company, is planning to buy the second largest company Arcelor.But the CEO of Arcelor Guy Dolle refuses the bid.

Lakshmi Mittal is the largest share holder of his company, but it's the opposite in the case of Arcelor, where share holders possess the major part. So if Mittal convinces the share holders, then the job would be easy for him, but at present, there are road-blocks in this bid.

Why Mittal wants Arcelor?

On every acquisition made by the Mittal steels, Arcelor was the default competitor which made the Mittals to bid more and acquire the company. This effect was much realized during the acquisition of a Ukraine based company, when Mittal spent around $4.5 billions. This bid price was considered too higher than the actual worth of the company. This bid raised eye-brows of many Industry analysts, of course for Mittal too. Then the idea struck in Mittal's mind when he thought 'Why always fight with Arcelor, let me buy them!' .

The other reason is, if Mittal buys Arcelor, he will have 10% percent of the Global market and he can also fix up the Corporate governance issue being faced by his company. Arcelor is said to have good corporate governance.

Why Arcelor refuses?

The reason is simple, he doesn't want his company to be sold out. Unfortunately he has no control over it. So he is lobbying the politicians in Europe to hinder the bid process. Arcelor's fears are about the family-controlled type of business.The CEO of Arcelor, Dolle has less confidence on Mittal's son Aditya, as he is expected to be a key driver in the merged entity. But Mittal refutes the statement by showcasing Aditya's lead role during the company's first Initial Public offering and at the time of acquiring ISG, the America's largest steel company. After this acquisition, Mittal steel rose to the first position in the steel Industry and Mittal became the third richest man on the earth.

Series of events from the day one:

When Mittal decided to buy Arcelor, he called Dolle for a dinner in his Palace house in London. The CEO of Arcelor came with one of his Board members and Mittal along with his son. As Mittal proposed this idea to Dolle, he refused the bid. Subsequently, Mittal allowed Dolle to take his own time to consider the proposal and he told Dolle that he is expecting a meeting call from him. As Mittal did not receive any meeting invitation, he called up the CEO over the phone. Since, Dolle was in no mood to accept the bid, he told Mittal that 'I am going to hang up as the line is not clear!!!' Clueless Mittal, left a message in his Voice mail for a friendly meeting. As Expected, there was no reply from the CEO.

What now?

Mittal is trying to convince the European leaders and of course the Arcelor. He is touring all over the Europe to get the job done. Now Arcelor is ready to consider the offer, if Mittal moves to all-cash deal mode. But for which Mittal is not ready as it proves too costly.Morever, Mittal says the share holders of Arcelor are happy with the deal as the share price increased dramatically, as he proposed the bid. But Dolle refused by saying 'it saw a marginal increase before the bid itself'. Morever Mittal allayed the fears of Job loss that may cause due to the acquisition.

When Mittal was asked about his next move on the occasion of bid failure, he said ' I am very confident on its success!'

Category : Personality!, Controversy!, Industry!