Case CISCO
PG0-002
MAY 6, 2011
PANKAJ GHEMAWAT
RAVI MADHAVAN
Mittal Steel in 2006: Changing the Global Steel Game
On January 27, 2006, Laxmi Niwas Mittal (LNM) and his son, Aditya Mittal, Chairman & CEO and
CFO respectively of Mittal Steel, prepared for the press conference at which they would announce
Mittal Steel’s unsolicited €18.6 billion bid to acquire the European steelmaker Arcelor. Although
Mittal Steel had been a prime mover behind the consolidation of the industry—and most participants and observers in 2006 seemed to accept the logic of consolidation—an offer for Arcelor was unlikely to have been anticipated by the industry. Arcelor had been created in 2001 by the merger of three
European steelmakers—Usinor (France), Arbed (Luxembourg), and Aceralia (Spain)—that were themselves, in turn, the result of previous mergers in their respective countries. Mittal Steel and
Arcelor were at that point the two largest and most global steel producers; it would have been far easier to imagine the two giants growing in parallel through other significant acquisitions. For example, World Steel Dynamics had sketched out a scenario in which Mittal Steel acquires the AngloDutch steelmaker Corus and Arcelor acquires ThyssenKrupp of Germany1. Yet, at the announcement of the offer on that winter day in London, LNM, described by the New York Times as having “never been bashful about his global ambitions2,” would present the combination of Mittal Steel and Arcelor as the next logical step in the evolution of the industry.
“This is a great opportunity for us to take the steel industry to the next level. Our customers are becoming global; our suppliers are becoming global; everyone is looking for a stronger global player.”3
A torrent of deals
The amount we will receive for this company [the Kryvorizhstal steel plant] will be 20 per cent higher than all the proceeds received in all the years of the Ukrainian privatization.
— Ukrainian President Viktor
MAY 6, 2011
PANKAJ GHEMAWAT
RAVI MADHAVAN
Mittal Steel in 2006: Changing the Global Steel Game
On January 27, 2006, Laxmi Niwas Mittal (LNM) and his son, Aditya Mittal, Chairman & CEO and
CFO respectively of Mittal Steel, prepared for the press conference at which they would announce
Mittal Steel’s unsolicited €18.6 billion bid to acquire the European steelmaker Arcelor. Although
Mittal Steel had been a prime mover behind the consolidation of the industry—and most participants and observers in 2006 seemed to accept the logic of consolidation—an offer for Arcelor was unlikely to have been anticipated by the industry. Arcelor had been created in 2001 by the merger of three
European steelmakers—Usinor (France), Arbed (Luxembourg), and Aceralia (Spain)—that were themselves, in turn, the result of previous mergers in their respective countries. Mittal Steel and
Arcelor were at that point the two largest and most global steel producers; it would have been far easier to imagine the two giants growing in parallel through other significant acquisitions. For example, World Steel Dynamics had sketched out a scenario in which Mittal Steel acquires the AngloDutch steelmaker Corus and Arcelor acquires ThyssenKrupp of Germany1. Yet, at the announcement of the offer on that winter day in London, LNM, described by the New York Times as having “never been bashful about his global ambitions2,” would present the combination of Mittal Steel and Arcelor as the next logical step in the evolution of the industry.
“This is a great opportunity for us to take the steel industry to the next level. Our customers are becoming global; our suppliers are becoming global; everyone is looking for a stronger global player.”3
A torrent of deals
The amount we will receive for this company [the Kryvorizhstal steel plant] will be 20 per cent higher than all the proceeds received in all the years of the Ukrainian privatization.
— Ukrainian President Viktor