1. LAKSHMI MITTAL AND THE GROWTH OF MITTAL STEEL (Study case, chapter 7)
Andréanne Delisle
Simone Frscoli
Marco Luraghi

2. FORCES THAT DROVE MITTAL EXPANDING
1970 Limited growth opportunities in India due to:
Regulations constraints
Competition from 2 big rivals
1975 Steel making plant set in Indonesia
1989 1° acquisition (“Iron & Steel” of Trinidad & Tobago)
After 1989 Global steel industry was in a slump. Lakshmi predicted that the industry would have turned a corner. It was TRUE.

3. WHY M&A INSTEAD OF GREENFIELD INVESTMENT
M&A are quicker to execute.
Acquiring a foreign firm means also acquiring valuable strategic assets (i.e. equipment, customers and distribution systems).
Less risky to buy something exsisting than building it from the ground.
Mittal believed it could increase the efficiency of the acquired unit by transferring capital, technology and management skills.

4. Global growth
Geographic presence: 27 countries, across 4 continents with operations among more than 60 nations.
Also in developed countries.
Brazil’s central role in South America.
Future plans: Building a stronger presence in Asia and increasing the global market shares (20% today).

5. Mittal’s advantages
“Not a single country that we operate in accounts for more than 8 per cent of our total sales…we are not dependent on one or two people.” Says Mittal.
Increasing revenues and market shares.
Less concentrated risks.
Having economies of scale.
Cross-selling operations.
More confidence, know-how and synergies.
Reduction of tax liabilities.

6. Countries’ benefits VS. drawbacks
Lower prices.
Improving the domestic economy.
More trade operations.
“Minute factory” model for emerging nations.
VS.
No spaces for rivals.
Excess of demand.
Higher public expenditure.

7. Acquisition of Arcelor
Hostile takeover bid
Mittal offered $32 Billion
The acquisition was contested
Management of Arcelor
Politicians
The deal was approved in late 2006
ArcelorMittal is now the world’s largest steel company.

8. Why did the politicians object?
Public opinion
Social context (Arcelor employees)
Governments were shareholders
Pressures from Arcelor Management
Are these objections reasonable?

9. THANKS FOR YOUR ATTENTION!!!