Callll

Chapter 3

Case Study: Mittal Acquires Arcelor in a Battle of Global Titans

1. Identify the takeover tactics employed by Mittal. Explain why each was used.

Answer: Mittal attempted a friendly takeover by initiating behind the scenes negotiations with Guy Dolle, CEO of Arcelor. However, after being rebuffed publicly, Mittal employed a two-tiered cash and stock tender offer to circumvent the Arcelor board. To counter virulent opposition from both Arcelor management and local politicians, Mittal announced that it would condition the second tier of its tender offer on receiving more than one-half of the Arcelor voting stock. However, the second tier offer would be at a slightly lower price than offered in the first tier. This was done to encourage Arcelor shareholders to participate in the first tier offering. If Mittal could gain a majority of voting shares it would be able to acquire the remaining shares through a backend merger. Moreover, Mittal sued to test the legality of Arcelor’s moving its recently acquired Dofasco operations into a trust to prevent Mittal from selling the operation to help finance the takeover. Mittal also attempted to rally large shareholder support against what were portrayed as Arcelor management’s self-serving maneuvers. Finally, Mittal continued efforts to appeal to shareholders by raising its bid from its initial 22 percent premium to the then current Arcelor share price to what amounted to a 93 percent premium and agreeing to eliminate its super-voting stock which had given the Mittal family shares that had ten times the voting rights of other shareholders.

2. Identify the takeover defenses employed by Arcelor? Explain why each was used.

Answer: Initially, Guy Dolle attempted to gain support among local politicians and the press to come out against the proposed takeover by emphasizing potential job losses and disruption to local communities. Arcelor also provided its shareholders with an...