Case Study 3–1. Mittal Acquires Arcelor—A Battle of Global Titans
in the European Market for Corporate Control
Ending five months of maneuvering, Arcelor agreed on June 26, 2006, to be acquired by
larger rival Mittal Steel Co. for $33.8 billion in cash and stock. The takeover battle was
one of the most acrimonious in recent European Union history. After decades in which
hostile transactions were rare, the battle between the two steel titans illustrates Europe’s
move toward less-regulated markets. Hostile takeovers are now increasingly common in
Europe. The battle is widely viewed as a test case as to how far a firm can go in attempting
to prevent an unwanted takeover.
Arcelor was created in 2001 by melding steel companies in Spain, France, and Luxembourg.
Most of its 90 plants are in Europe. In contrast, most of Mittal’s plants are outside
of Europe in areas with lower labor costs. Lakshmi Mittal, Mittal’s CEO and a
member of an important industrial family in India, started the firm and built it into a
powerhouse through two decades of acquisitions in emerging nations. The company is
headquartered in the Netherlands for tax reasons. Prior to the Arcelor acquisition,
Mr. Mittal owned 88 percent of the firm’s stock.
Mittal acquired Arcelor to accelerate steel industry consolidation to reduce industry
overcapacity. The combined firms’ could have more leverage in setting prices and negotiating
contracts with major customers such as auto and appliance manufacturers, suppliers
such as iron ore and coal vendors, and eventually realize $1 billion annually in pretax
The War of Words
After having been rebuffed by Guy Dolle, Arcelor’s president, in an effort to consummate
a friendly merger, Mittal launched a tender offer in January 2006 consisting of mostly