LAKSHMI MITTAL
AND THE GROWTH
OF MITTAL STEEL
(Study case, chapter 7)
Andréanne Delisle
Simone Frscoli
Marco Luraghi
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.
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.

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).

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.

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.

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.

WHY DID THE POLITICIANS OBJECT?
Public opinion
 Social context (Arcelor employees)
 Governments were shareholders
 Pressures from Arcelor Management

Are these objections reasonable?
THANKS FOR
YOUR
ATTENTION!!!