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Ms Li

By | Feb. 2013
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The motives for Arcelor’s management to reject Mittal’s offer

Arcelor’s directors rejected Mittal’s the initial 18.6 billion euro cash-and-share offer for Arcelor and claimed that it was ‘150% hostile.’ In our point of view, there are some psychological fears and economic considerations for Arcelor’s management to refuse Mittal. As it stated in the case, “Mittal Steel in 2005 was headed by one of the world’s wealthiest individuals.” It is clear to see that there is a huge influence of the Mittal family in the world. This causes Arcelor’s management’s anxiousness about the future influences to the company from the point of view of public to the Mittal’s family. For example, presses always keep their eyes on famous individuals. If some gossips related to Mittal were published, it might affect the overall images and reputations of the company. Meanwhile, when there is an acquisition or merger, there must have an adjustment of the management level. Arcelor’s managements are feared to be kicked out from the board and lose their power of control. To this extent, the directors have to secure themselves in a steady position and make sure that the benefits to them exceed the costs. Risks will not be taken by Arcelor’s management as Mittal’s offer did not give them any confidences that whether they can be benefited from the merger and there was no convinces or promises made by Mittal to them about their careers. Furthermore, the initial approach by Mittal created the feelings of distrust. Mittal invited a dinner to Guy Dolle, takeover bid was announced by Mittal after two weeks after that. This sudden action made by Mittal gave a negative first impression to Arcelor’s directors. No cooperation can be made without building a trust between partners. In addition, as stated by Lakshmi Mittal, “values, culture and tradition are important for mergers in Europe.” Mittal is an Indian-born who left India in his late 30s. There are many culture differences between Acelor’s...
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