Arcelor Mittal

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

Mittal’s tactics were fairly straightforward, consisting of multiple tender offers and litigation to challenge one of Arcelor’s moves:

• First Mittal attempted a friendly merger, using a tender offer that consisted of stock and cash which would pay a 27% premium above Arcelor’s share price. The offer was rebuffed by Arcelor president Guy Dolle, and also criticized heavily by European Union politicians as well as trade unions.

• Mittal then announced that it would hold a second, less attractive tender offer; this in an attempt to persuade shareholders to offer their shares during the first offer.

• When Arcelor purchased Dofasco in 2006 and set up a Dutch trust to prevent Mittal from gaining access to Dofasco, Mittel launched sued (used litigation) to test the legality of Arcelor’s tactics.

• After submitting a detailed business plan at Arcelor’s insistence, Mittal increased its tender offer by 34% and to further entice shareholders, agreed to eliminate Mittal’s two tiered share structure that gave super voting rights to the Mittal family.

• Finally, Mittal increased the tender offer by another 14%, which finally paid a 93% premium above Arcelor’s share price prior to Mittal’s original bid.

2. Identify the takeover defenses employed by Arcelo. Explain why each one was used.

Arcelor’s takeover defense was multi-faceted and aggressive:

• First, Arcelor rebuffed the initial tender offer, seeking and receiving political support for its position from various powerful European Union and Luxemborg politicians as well as trade unions.

• Arcelor doubled its dividend, and also announced a stock buy-back plan that offered to buy shareholders’ stock at a price well above the current market price. The buy-back was done to make the tender offer proposed by Mittal less attractive to Arcelor shareholders while the dividend increase was intended help retain current Acrelor...