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largest of the 10 now held a little less than 10 per cent of total global
capacity despite being three times
larger than the second largest company. The industry was still fragmented, with
room for consolidation.
ISSUES IN AUGUST 2006
GMB had provided four principles to guide integration:
1. Bifocal vision: The integration team would focus on optimizing the combined
entity ArcelorMittal, not
the two companies individually. In doing so, it would keep an eye not only on
generation but also on fundamental multi-year improvements aimed at creating
2. Keeping it simple: Integration would be a seamless extension of daily life.
The responsibility for
delivering targets would lie with line managers. The integration team would
use the ongoing budget
and planning cycles in each company to drive the timing of integration.
3. Focus: The integration would be driven around four “core” processes:
budgeting and control, capex
planning, operational control and human resources (HR).
4. Best of both: Because ArcelorMittal was a merger of equals, the team would
seek the best-in-class
processes in each company to incorporate into the combined entity.
Granboulan and Scotting needed to deliver an efficient and rapid integration,
while also securing the day-
to-day business. The top-down financial target of synergies amounting to $1.6
billion, provided by GMB,
was based on learning from earlier acquisitions at both Mittal and Arcelor.
Granboulan and Scotting
needed to validate this number from within ArcelorMittal, from the bottom up.
The involvement of line
managers would ensure their buy-in, which was essential to formulating and
implementing the action plans
for delivering the synergies.
Initially, the merger would primarily affect only those working in procurement,
sales, marketing and the
corporate center. Some time would pass before the impact of the merger trickled
down to operations
because the plants had limited overlap. The time lag would thus create
uncertainty for a large swathe of the
Given the deadline of six months to achieve integration, Granboulan and Scotting
needed to act quickly to
decide on the composition of the integration team, bring the team together,
identify the role of the
integration office and determine the essential characteristics of the