KVSSNRao's Handbook of Mergers and Acquisitions

Compiled by Dr. K.V.S.S. Narayana Rao, Professor, National Institute of Industrial Engineering (NITIE),
Mumbai- 400087, India. Email: kvssnrao50@gmail.com

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F R I D A Y, S E P T E M B E R 2 1 , 2 0 0 7

Case Study : Merger of ARCELLOR and MITTAL

ABESH CHATTERJEE, ARIJIT GOVEAS, JEEBENDU MANDAL, PRASHASTI PRAKASH (PGDIM - 13, NITIE), K.V.S.S.
Narayana Rao

INTRODUCTION TO CASE

ArcelorMittal is the largest steel company in the world. The company was founded in 2006 when Arcelor and
Mittal Steel company merged. The company is headquartered in Luxemberg City, in southern Luxemberg, the
former seat of Arcelor.

Arcelor Mittal produces as much as 110 million tons of steel a year, about 10 percent of world output. The
company also controls the biggest bulk handling port in Mexico, from where it imports iron ore and exports
semi-finished steel products.
Laxmi Mittal (owner of Mittal Steel) is the president and chairman. Mittal's familyl holds a 43.6% stake in this
company. Counting all shareholders, 50.6% will be former Arcelor shareholders and 49.4% will be former
Mittal shareholders.

In addition to Lakshmi Mittal as president and chairman, the Board of Directors of the company consists of
eighteen non-executive members with six nominated by Mittal, three chosen independently, six nominated
by Arcelor, three chosen by existing Arcelor shareholders and three employee representatives.

MERGER PROCESS

Mittal Steel Announcement Offer for Arcelor Merger proposal to create first 100 million ton plus steel
producer US$40 billion merger marks step change in steel sector consolidation

Mittal Steel N.V. (Mittal Steel) on 27 January, launched an offer to the shareholders of Arcelor SA

(Arcelor) which would create the worlds first 100 million ton plus steel producer. The offer valued each
Arcelor share at 28.21 which represented a 27% premium over the closing price and all time high on
Euronext Paris of Arcelor shares on 26 January 2006, a 31% premium over the volume weighted average price
in the preceding month, and a 55% premium over the volume weighted average share price in the preceding
12 months.

This offer valued Arcelor at an equity value of 18.6 billion on a fully diluted basis.

The new company was expected to have:

Unprecedented scale, scope and synergies

Pro-forma* 2005 annual revenues of approximately US$69bn and EBITDA of
US$12.6bn (*IBES estimates)
Pro-forma market capitalisation of approximately US$40 billion
Leading positions in NAFTA, EU, Central Europe, Africa and South America
Expected synergies of US$1 billion from purchasing, marketing and manufacturing efficiencies
Exceptional raw material resources with a high degree of iron-ore self
sufficiency
Reduced volatility through geographic and product diversification
Security of long-term contracts through high value-added products
Low cost profile and high growth prospects from developing markets
Leading position across a range of key product segments
Ability to supply customers on a global basis
A dividend policy representing c. 25% of earnings over the cycle

Under the terms of the offer, Arcelor shareholders were expected to receive 4 Mittal Steel shares and 35.25
cash for every 5 Arcelor shares (equivalent to 0.8 Mittal Steel shares plus 7.05 cash for each Arcelor share).
In addition, they were to have the right to receive a cash or stock mix in any proportion they elect, provided
that 25% of the aggregate consideration paid to Arcelor shareholders was paid in cash and 75% in stock. The
maximum amount of cash to be paid by Mittal Steel was to be approximately 4.7bn and the maximum
number of Mittal Steel shares to be issued were approximately 526.6 million, assuming the conversion of the
outstanding Arcelor Convertible Bonds (2017 OCEANEs).

Mittal Steel also announced that it had entered into an agreement with ThyssenKrupp AG (ThyssenKrupp)
to resell to ThyssenKrupp all the common shares of Dofasco Inc (Dofasco) that Arcelor purchases in its
pending tender offer for Dofasco or later, at a price equal to the Euro equivalent of C$ 68.00 per share,

adjusted based on changes in net financial debt and net working capital from the date of acquisition of
Dofasco by Arcelor and the date of resale to ThyssenKrupp.

HIGHLIGHTS OF THE OFFER

The offer valued each Arcelor share at 28.21 which represented a 27% premium over the closing price of
Arcelor shares on Euronext Paris as of 26 January 2006, a 31% premium over the volume weighted average
price in the preceding month, and a 55% premium over the volume weighted average share price in the
preceding 12 months. Mittal Steel offerd to acquire all of the outstanding Arcelor shares through three
offers:

- a primary mixed cash and exchange offer for Arcelor shares consisting of 4 new
Mittal Steel shares and 35.25 in cash for every 5 Arcelor shares;

- a secondary cash offer consisting of 28.21 per each Arcelor share;

- a secondary exchange offer consisting of 16 new Mittal Steel shares for every 15
Arcelor shares.

Arcelor shareholders could tender their shares in either the primary offer or either or both of the secondary
offers, but the two secondary offers will, in the aggregate, comprise 75% in Mittal Steel shares and 25% in
cash.

Mittal Steel also offered to acquire Arcelor Convertible Bonds (OCEANEs 2017)
based on the following exchange ratio: 4 new Mittal Steel shares and 40 in cash for every five Arcelor
Convertible Bonds.The offer was conditioned on the tendering of more than 50% of Arcelors share capital
and voting rights on a fully diluted basis, the extraordinary shareholders meeting of Mittal Steel having
approved the issuance of new Mittal Steel shares to Arcelor shareholders (the Mittal family having
undertaken to vote in favour of the issuance of such new Mittal Steel shares) and the absence of events or
actions that would alter
Arcelors substance.

The draft offer document was filed with the Luxembourg Commission de Surveillance du Secteur Financier
(the CSSF). In order to coordinate the process in the various jurisdictions in which Arcelor securities are
listed, the offer was also filed with the competent authorities in other countries, including in Spain and
Belgium. A draft share offering prospectus was filed with the Dutch AFM and with the French AMF. A

registration statement was filed with the US SEC.

In addition, this transaction was reviewed by antitrust authorities in the EU, the US and possibly other
jurisdictions around the world.

SYNERGIES CLAIMED:

1.1 Step change in steel sector consolidation

The combination of Mittal Steel and Arcelor represents a step change in the consolidation of the steel sector.
The combined group was expected to have approximately 320,000 employees worldwide, annual sales of
more than US$69 billion and annual crude steel production of approximately 115 million metric tons, which
represents a global market share of approximately 10 per cent by volume. This transaction was expected to
create a steel company with unprecedented scale, a strong global presence and a broad based product
offering. This unique platform was expected to provide the combined company with unrivalled financial
strength and strategic flexibility to pursue growth and value creation opportunities. Despite a trend towards
increasing consolidation over the past few years, the global steel industry remained relatively fragmented
compared to end-market customers and raw materials suppliers. Recent consolidation has led to increased
focus amongst producers on adjusting production to market conditions. The combination of the top two steel
companies in the world was expected to represent a further step towards achieving a sustainable operating
environment for the steel industry.

1.2 Expanding geographic footprint with leading positions in a number of regions

The geographic overlap between Mittal Steel and Arcelor was limited. This combination was expected to
create a truly global steel company with leading
positions in the five main regions (South America, NAFTA, European Union, Central Europe and Africa).
Geographic diversification was expected to reduce volatility for the enlarged group while presenting
numerous strategic opportunities. Through its diverse asset base in both emerging and developed markets,
the company was expected to be ideally placed to take advantage of multiple market opportunities.
Mittal Steels North American activities were to be complemented by Arcelors strong position in Western
Europe. These developed markets had expertise in producing highly value-added products and provided
opportunities for new product development. Mittal Steel had leading positions in emerging markets in
Eastern andCentral Europe, Asia and Africa. These regions offered low cost production, high growth

prospects and in many cases, access to significant raw material reserves.

1.3 Strengthening the range of products and solutions for global customers

The enlarged group was expected to have leading positions in a number of product segments and have the
ability to supply customers across a range of geographic regions and in end-markets such as automotive,
domestic appliances, packaging, construction and oil and gas. The company was also expected to have a
strong value-added contract business which will allow for reduced pricing volatility.
In the automotive sector, the new group was expected to be the leader in both the
European Union and NAFTA regions and will also have leading positions in South America, Eastern Europe,
Africa and Asia. In appliance and packaging, the group was expected to be the leader in the NAFTA region
and one of the leaders in the European Union. In construction, the group will have a leading position in most
of the markets it serves and a growing presence in the oil and gas sector. The expertise of both groups in the
various applications and end markets could be combined to develop new market opportunities.

1.4 Maximising opportunities with a global distribution and trading network

Mittal Steel and Arcelor together was expected to have the ability to optimise
production and distribution on a global basis. The international production base of the group was expected
to facilitate global sourcing of materials and products that can be directed to the markets where they are
ultimately required. The combined companys access to a broad range of customers enabled the group to
capitalise on market opportunities and expand into new areas. The combined company was expected to
eliminate cross-border trade flows and thus generate substantial savings.

1.5 Increasing efficiency of the combined asset base through investment and operational excellence

Mittal Steel aimed to maximise the value and opportunities within the combined portfolio of assets. Major
initiatives included:
(i) Leveraging Mittal Steels R&D capabilities for processing and product innovation
(ii) Improving productivity through global benchmarking and continuous improvement programmes across the
network of operating units
(iii) Maximising industrial potential between units, for example through product specialization by unit
By organising and optimising product flow and investments throughout the production system, the company
was expected to have the ability to realize
more potential and value from its asset base.

1.6 Controlling input costs by maximising the synergies from integration of

mining and steel making

Integration of mining activities with steel production was a key element of the groups strategy. The
combined company was expected to be one of the five largest producers of iron ore worldwide and also have
direct ownership of DRI plants, coal mines, coke production and certain infrastructure assets. The group was
expected to have the opportunity to expand its mining operations in order to reduce the dependency on
third-party supplies of iron ore and coal. By 2010, the combined group aimed to be about 50 per cent self
-sufficient in iron ore.

1.7 Targeting operational synergies of US$1 billion

Target annual cost synergies were expected to reach US$1 billion before tax by the end of 2009. The
integration and restructuring costs to realize this level of synergies were expected to be minimal. The
industrial plan for the combined entity identified several synergies, primarily from purchasing, marketing
opportunities and manufacturing process optimization.

1.8 Maximising financial opportunities

Based on the closing Mittal Steel share price on the New York Stock Exchange of US$32.30 (equivalent to
26.45 per share at an exchange rate of US$1.2214 per 1) on 26 January 2006, the pro forma equity market
capitalisation of the enlarged group was expected to be approximately US$40 billion and the free float was
to be significantly increased to approximately 43% (assuming 100% acceptance of the Offer). The Group was
expected to benefit from a lower cost of capital, improved access to the capital markets, enhanced profile
with investors and a high level of liquidity for trading of the companys shares. Finally, the financial
resources of the enlarged company were expected to provide the flexibility for the Group to pursue both
internal and external growth opportunities. Mittal Steel was committed to maintaining an investment grade
rating.

GAINS FOR ARCELOR

Operations in high-growth economies with

low-cost, profitable assets and local
operating expertise in numerous emerging
markets

Leadership position in high-end segments

in North America, with strong R&D
capabilities

Access to raw materials and upstream

integration

Access to very low cost slab potential in

Ukraine to serve West Europe

GAINS FOR MITTAL STEEL

Leadership position in high-end segments in

Western Europe, with strong R&D capabilities

Low-cost slab manufacturing in Brazil that

can be expanded for export to Europe and
North America

Increased free float and liquidity

Successful distribution business in Europe

SUMMARY TERMS AND CONDITIONS OF THE OFFER:

Mittal Steel offered to acquire all outstanding Arcelor ordinary shares and Arcelor Convertible Bonds (2017
OCEANEs), as follows:

4 new Mittal Steel shares and 35.25 in cash for every 5 Arcelor ordinary
shares;

 4 new Mittal Steel shares and 40 in cash for every 5 Arcelor Convertible
Bond.

Holders of Arcelor shares in lieu of this mix of Mittal Steel stock and cash, could make the following elections
with respect to the consideration to be received:

Elect to receive 16 new Mittal Steel shares for every 15 Arcelor shares; or
Elect to receive 28.21 in cash for each Arcelor share.

Holders were required to make the same election for all Arcelor shares tendered, and either of these
elections may be made for all or some of the Arcelor shares to be tendered. However, these elections were
subject to aproration and allocation procedure to ensure that 75% of the tendered Arcelor shares were
exchanged for new Mittal Steel shares and 25% were exchanged for cash.

If certain actions were taken by Arcelor including distributions or share buybacks

the consideration set forth above were to be adjusted accordingly.The offer was made for all issued and
outstanding Arcelor shares, as well as for all Arcelor shares that are held in treasury stock and all Arcelor
shares that were or were expected to become issuable prior to the expiration of the Offer due to the
conversion of Arcelor Convertible Bonds or the exercise of Arcelor stock subscription rights.

The completion of the offer was to be subject to the following conditions:

(i) the number of Arcelor shares tendered to the offer represents on the closing date of the offer more than
50% of the total share capital and voting rights in Arcelor, on a fully diluted basis;

(ii) the extraordinary general meeting of shareholders of Mittal Steel approved the acquisition of Arcelor as
contemplated by the offer and the issuance of the new Mittal Steel shares; the Mittal family which held 97%
of the voting rights in Mittal Steel had undertaken to vote in favor of such resolutions; and

(iii) during the offer period, no exceptional events occur and Arcelor does not take any actions that (in
either case) would in Mittal Steels view alter Arcelors substance, including but not limited to share
repurchases, acquisitions or disposals of material assets and any distribution of dividends or assets, whether
such distribution is paid out of current earnings, retained earnings or reserves.

TAKEOVER DEFIANCE:

Arcelor later implemented a white knight defence through a transaction structure contemplating the
issuance of shares to a friendly strategic partner (SeverStal of Russia), which was also a technique allowed in
certain jurisdictions in Europe (but not in the U.K.) and used in the U.S. Just as Arcelor took actions to
protect Dofasco with the S3, Arcelor believed that an opportunity to acquire SeverStal was consistent with
Arcelors corporate interest and should, if possible, be presented as a viable alternative to Mittal Steels
original offer, which Arcelor believed was an inadequate offer. While Arcelor had a previous mandate from its
shareholders to issue the Arcelor shares proposed to be issued to Mr. Mordashov (SeverStals controlling
shareholder), the Arcelor Board felt it was important to give the shareholders an opportunity to express their
opinion on the transaction, in particular given the outstanding takeover offer from Mittal Steel. The Arcelor
Board called an extraordinary meeting of shareholders on June 30, 2006, to vote on the SeverStal
transaction. Unless more than 50% of the then outstanding Arcelor shares opposed the transaction, the
merger with SeverStal would proceed. While the 50% unwind mechanism was criticised by the market,
including institutional investors, the SeverStal transaction caused Mittal Steel to increase the price of its
offer and to deliver better overall corporate governance and other terms. And in the end, the proposed
SeverStal merger was unwound as over 50% of Arcelors shareholders voted to unwind it.

MERGER OFFER AND SUBSEQUENT NEGOTIATIONS:

Jan 27, 2006: Mittal Steel unveils 18.6b cash and share offer for Arcelor

Jan 29: Arcelor directors reject Mittals offer as 150 per cent hostile, saying the companies do not share
same vision, business model and values

Jan 31: Jean-Claude Juncker, prime minister of Luxembourg, which holds 5.6 per cent of Arcelor, vows to use
all necessary means to fend off Mittals unsolicited offer

Feb 16: Arcelor raises 2005 dividend by 85 per cent.

Apr 4: Arcelor says it will distribute 5bn to shareholders. Raises 2005 dividend to 1.85

Apr 28: Arcelor chairman says supervisory board would think again if Mittal made a cash
bid

May 9: Mittal says it is willing to revise terms if Arcelor board recommends its bid

May 12: Arcelor says it will implement 5bn share buy-back

May 17: Mittal launches offer after regulators approve terms of the deal

May 18: Mittal raises offer by 34 per cent to 25.8bn with a 57 per cent increase in cash component. New
deal would relinquish Mittal family control of group.

May 25: Arcelor agrees to join forces with Russian steelmaker, Severstal

May 30: Leading Arcelor shareholders speak out against proposed Severstal merger

May 31: More than a third of Arcelor investors sign a letter demanding the right to vote on a deal

June 7: Arcelor agrees to meet representatives from Mittal

June 11: Arcelor formally rejects Mittals 25.8bn bid and reiterates plans to press ahead with Severstal
merger, but leaves the door open for an increased offer from Mittal and gives shareholders the chance to
vote

June 18: Arcelor cancels shareholder vote on Severstal

June 20: Spanish investor forces Severstal rethink after calling for management changes at Arcelor

June 21: Severstal changes terms of its proposed merger with Arcelor to counter shareholder fears

June 25: Arcelor recommends upgraded 26.9bn Mittal offer after intensive talks

Finally deal was finalised when Arcelor accepted 33.5bn offer from Mittal.

STRUCTURING OF THE DEAL:

The proposed transaction presented by the member

Joseph Kinsch Chairman, Arcelor ,Lakshmi N. Mittal Chairman & CEO, Mittal Steel, Gonzalo Urquijo SEVP-

CFO, Arcelor, Aditya Mittal President & CFO, Mittal Steel

were as follows..

Offer

13 Mittal Steel shares plus 150.6 cash for 12 Arcelor shares4.

Ability to elect to receive more cash or shares, subject to 31% cash and 69% stock paid in aggregate
Very significant premium to Arcelors pre bid all time share price high
10.1% further improvement in the offer based on latest MT share price
7.0% further improvement in the offer based on 19 May revised offer

Values Arcelor shares at 40.4 as at 23 June close

Conditions

Minimum acceptance >50.0%

No change in Arcelor or Mittal Steel substance during offer

Process:
Expect to file revised offer shortly
Closing of the tender offer expected to be extended by a few days beyond
5 July

Key contract terms:

Other offers

Arcelor agreed to accept no other offer for Arcelor shares unless it was a
superior offer for the entire share capital of Arcelor

No break-up fee required in contract

If shares are issued under the Strategic Alliance Agreement, corporate governance rules and certain other
conditions terminate

 Standstill

Mittal family agreed to a standstill at 45% of share capital. Exceptions in

certain circumstances - consent of a majority of the independent directors or in
case of passive crossing of such thresholds

Lock up

Mittal family agreed to a 5-year lock-up, subject to certain exceptions,

including the right to dispose of up to 5% of the share capital after the 2nd year.

High standards of corporate governance:

Shareholder voting rights

All shares with identical voting and economic rights: One share - one vote regardless of holding period

Composition of initial Board of Directors

Mr Kinsch to be Chairman, Mr Mittal to be President

Upon Mr Kinschs retirement, Mr Mittal becomes Chairman
The Board of Directors will be composed of 18 members, all non executive (majority independent)
6 members from Arcelor
6 members from Mittal Steel
3 current representatives of existing Arcelor major shareholders
3 employee representatives

After expiry of three year period, shareholders to elect Board of Directors

Board Committees

an Audit Committee composed solely of independent directors

an Appointments and Remuneration Committee composed of 4 members, including
the Chairman, President and 2 independent directors

Composition of Management Board

 The Management Board will be comprised of 7 executive members

4 current Arcelor executives, CEO to be proposed by the Chairman
3 Mittal Steel executives

ACCOUNTING AND ADJUSTMENT:

Purchase price allocation

The Company was in the process of allocating the purchase price for its acquisition of
Arcelor. It should be noted that all of the purchase price allocation adjustments made and
reflected in the Companys December 31, 2006, financials (Income statement and Balance sheet) were still
preliminary and could materially change as a result of the finalization of the purchase price allocation
process . It was expected that this allocation would be finalized in Q2 2007.

The Company recorded the following significant preliminary purchase price adjustments:

Inventory

Inventory was increased by $1.1 billion as of the acquisition date (August 1, 2006). The
pro forma income statement excludes the effects of this adjustment.

Tangible fixed assets

The Company is being assisted by an independent appraisal firm in valuing the tangible
fixed assets acquired and assessing the remaining useful lives of these assets. Based on
the preliminary estimates, the Company increased the value of the tangible fixed assets
acquired by $12.3 billion. The Company also assessed the remaining useful lives of
these assets and concluded that the assets acquired have a longer average remaining
useful life than previously estimated by Arcelor. The Company therefore estimates, on a
preliminary basis, the annual additional depreciation charge to be insignificant.

Goodwill

As a result of the preliminary purchase price allocation, the Company currently estimates

goodwill related to the acquisition of Arcelor at $6.6 billion. This amount is still preliminary and could
materially change as a result of the finalization of the purchase price allocation process.

SUBSEQUENT PERFORMANCE :

Pro forma results twelve months ended December 31, 2006 versus twelve months
ended December 31, 2005 1

Arcelor Mittal pro forma net income for the twelve months ended December 31, 2006,
was $8.0 billion, or $5.76 per share, as compared with pro forma net income of $8.3
billion, or $5.97 per share for the twelve months ended December 31, 2005.
Pro forma sales and operating income for the twelve months ended December 31, 2006,
were $88.6 billion and $11.8 billion, respectively, as compared with $80.2 billion and
$11.6 billion, respectively, for the twelve months ended December 31, 2005.
Total steel shipments for the twelve months ended December 31, 2006, were 110.5
million metric tonnes as compared with 102.9 million metric tonnes for the twelve months ended December
31, 2005. Pro forma depreciation for the twelve months ended December 31, 2006, increased to $3.4 billion
as compared with $3.3 billion for the twelve months ended December 31, 2005.Pro forma net financing costs
for the twelve months ended December 31, 2006, remained flat as compared with $1.3 billion for the twelve
months ended December 31, 2005. Pro forma net financing costs for the twelve months ended December 31,
2006, include a charge of $367 million OCEANES1 and a gain of $450 million resulting from a Canadian dollar
swap. Pro forma income tax expense for the twelve months ended December 31, 2006, increased to $1.7
billion as compared with $1.4 billion for the twelve months ended December 31, 2005. The effective tax rate
for the twelve months ended December 31, 2006, was 14.9% as compared with 12.6% for the twelve months
ended December 31, 2005. Pro forma minority interest for the twelve months ended December 31, 2006,
remained flat at $1.5 billion as compared with the twelve months ended December 31, 2005.

Pro forma results three months ended December 31, 2006 versus three months ended September 30, 20061

Arcelor Mittal pro forma net income for the three months ended December 31, 2006, was
$2.4 billion, or $1.72 per share, as compared with pro forma net income of $2.2 billion, or $1.58 per share
for the three months ended September 30, 2006. Pro forma sales and operating income for the three months
ended December 31, 2006, were $23.2 billion and $3.2 billion, respectively, as compared with $22.1 billion
and $3.4 billion, respectively, for the three months ended September 30, 2006. Total steel shipments for the
three months ended December 31, 2006, were 26.7 million metric tonnes as compared with 26.9 million
metric tonnes for the three months ended September 30, 2006. Pro forma depreciation for the three months

ended December 31, 2006, decreased to $875 million as compared with $910 million for the three months
ended September 30, 2006. Pro forma net financing costs for the three months ended December 31, 2006,
was $4million income as compared with $352 million expense for the three months ended September 30,
2006, primarily due to a gain resulting from a Canadian dollar swap in the three months ended December 31,
2006. Pro forma income tax expense for the three months ended December 31, 2006, decreased to $642
million as compared with $669 million for the three months ended September 30, 2006. The effective tax
rate for the three months ended December 31, 2006, was 18.6% as compared with 20.5% for three months
ended September 30, 2006. Pro forma minority interest for the three months ended December 31, 2006,
increased marginally to $443 million as compared with $420 million for the three months ended September
30, 2006.

Liquidity and Capital Resources1

The liquidity position of the Company remains stable. As of December 31, 2006, the
Companys cash and cash equivalents including restricted cash and short term
investments were $6.1 billion. The net debt, which includes long-term debt plus shortterm debt less cash
and cash equivalents, restricted cash and short-term investments,
was reduced by $2.3 billion to $20.4 billion as compared to September 30, 2006.
In addition, the Company, including its operating subsidiaries, had available borrowing
capacity of $9.0 billion at December 31, 2006, as compared to $5.9 billion at September
30, 2006. On November 30, 2006, Arcelor Mittal entered into a credit facility, which is comprised of a _12
billion term loan and a _5 billion revolving credit facility (the _17 billion facility). The proceeds of the
term loan were used to refinance Mittal Steels _3 billion refinancing facility, _5 billion acquisition facility
and _2.8 billion bridge facility, along with Arcelors 4 billion term loan facility and a _3 billion revolving
credit facility. The _5 billion revolving credit facility has remained unutilized and is fully available to Arcelor
Mittal, the proceeds of which may be used for general corporate purposes. The _17 billion facility is
unsecured and provides for loans bearing interest at LIBOR or EURIBOR (based on the borrowing currency)
plus a margin based on a ratings grid.
Arcelor Mittals _3 billion refinancing facility, _5 billion credit facility and _2.8 billion bridge facility were
repaid and subsequently cancelled on December 14, 2006. Arcelors _4 billion term loan was repaid and
subsequently cancelled on December 14, 2006 and its
_3 billion facility was cancelled on December 5, 2006.
On September 27, 2006, Mittal Steel announced that its board of directors agreed upon a
new dividend and cash distribution policy. The new policy will be proposed to Mittal
Steels shareholders at the next general meeting. The new policy provides a mechanism
that will allow Mittal Steel to honor its commitment of returning 30% of net income to

shareholders every year through an annual base dividend, supplemented by additional

share buy-backs. Mittal Steels board of directors proposed an annual base dividend of
$1.30 (approximately 1 Euro at the current exchange rate). This base dividend has been
designed to guarantee a minimum payout per year and would rise in order to reflect the
underlying growth of Mittal Steel. Payment of this dividend will be on a quarterly basis.
In addition to this dividend, Arcelor Mittals board of directors proposed a share buy-back program tailored
to match the 30% distribution pay-out commitment. As a consequence, the sum of the annual base dividend
and the share buy-back program each year will represent 30% of annual net income. Based on the pro forma
annual net earnings announced for the twelve months ended December 31, 2006, the group will implement a
$590 million share buy-back and cash dividend of approximately $1.8 billion. This new distribution policy will
be implemented as of January 1, 2007 for the 2006 results, subject to shareholder approval. On February 2,
2007, Arcelor Mittal declared an interim dividend of $0.325 per share.The cash dividend will be payable on
March 15, 2007 to Euronext Amsterdam, Euronext Brussels, Euronext Paris, Luxembourg Stock Exchange and
Spanish Exchanges shareholders (European Shareholders) of record on February 27, 2007, and to NYSE
shareholders of record on March 2, 2007.

On December 15, 2006 Arcelor Mittal redeemed Arcelor's 3%[1] 2017 bonds convertible
and/or exchangeable into new and/or existing Arcelor shares. On December 26, 2006, Fitch Ratings affirmed
the Companys Issuer Default and senior unsecured ratings at BBB and Short-term rating at F2 and
removed the ratings from Rating Watch Negative.

Reference:
1. http://www.mittalsteel.com/NR/rdonlyres/277C38D1-AEAF-4554-9DEE-FF45603
AA8BC/1577/2007FebruaryARCELORMITTALREPORTSPROFORMAFULLYEARAN.pdf

2. http://www.mittalsteel.com/NR/rdonlyres/4EEFE0E4-ED69-4474-990B-B3CCFD4
C8DFE/712/2006JanuaryMittalannoucesofferforArcelor1.pdf
3. http://investors.arcelormittal.com

4. http://search.arcelormittal.com/search?Search=merger~section=selection~
selectionurls=http://www.arcelormittal.com/~results_option=scores~begin =0~wassite=1~method=Boolean
%20search~searchterm=merger
Posted by KVSSNRaoat 1:46 AM
Labels: Case Study, Cross-border

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2007 (185)

December (89)

November (73)

October (17)

September (4)

Recent Acquisitions by CISCO Systems Case Study

Case Study : Merger of ARCELLOR and MITTAL

Acquisition of Air Sahara by Jet Airways Case Stud...

Bibliography

August (1)

July (1)

About Me
KVSSNRao
Presently developing blogs to accmulate relevant materials in various subjects that I teach.
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