MERGER OF ARCELOR STEEL AND MITTAL STEEL

Steel Industry An Overiew

Steel is the worlds third largest

commodity

World production1.244 bn metric tons in

2005-06
Average growth rate per annum in 2005-06

was 9% and that over 2000 to 2005 being 6.1%

World production1.3 bn metric tons in 2007-

08

Type Industry Successor(s) Founded Headquarters Key people Products Revenue Operating income Net income Employees Website

Public Steel ArcelorMittal 1976 in Calcutta, India, 1989 as Ispat International in Sumatra, Indonesia Rotterdam, Netherlands Lakshmi Mittal, Founder, Chairman and CEO Steel, Flat Steel products, Coated Steel, Tubes and Pipes $28.132 billion USD Year to 31 Dec 2005 $4.746 billion (2005) $3.365 billion (2005) 320,000 (2006) Mittal Steel

Mittal Steel Company was formed by the merger of LNM holdings & ISPAT International International Steel Group Inc. CEO Lakshmi Mittals family owned 88% of the company and its headquarter was in Rotterdam, Netherlands The company was the worlds largest steel producer by volume and also the largest in turnover and is now a part of ArcelorMittal It was the major player in Steel, Flat Steel products, Coated Steel, Tubes and Pipes

Mittal Steel Growth Timeline

1989: Acquisition of Iron & Steel Company of

Trinidad & Tobago 1992: Acquisition of Sibalsa 1994: Acquisition of Sidbec-Dosco 1995: Acquisition of Hamburger Stahlwerke > Ispat International Ltd. and Ispat Shipping formed > Acquisition of Karmet 1997: Ispat International NV goes public 1998: Acquisition of Inland Steel Company
1999: Acquisition of Unimtal

2001: Acquisition of ALFASID > Acquisition of

Sidex

2002: Business assistance agreement signed with Iscor 2003: Acquisition of Nova Hut 2004: Acquisition of Polski Huty Stali > Acquisition of BH Steel > Acquisition of Macedonian facilities from Balkan Steel > Creation of Mittal Steel and proposed acquisition of International Steel 2005: Acquisition of a stake in Hunan Valin > ISG Acquisition completed > Mittal Steel Europe created > Mittal Steel makes Fortune 500 list of top companies> MDA with Liberian government > Acquisition of Kryvorizhstal > MoU with State of Jharkhand, India > Acquisition of Stelco subsidiaries > Stake lifted in Mittal Steel Zenica

Type
Industry Fate

Socit Anonyme
Steel merged with Mittal Steel

Predecessor(s)

Arbed (1911) Aceralia (1902) Usinor (1948)

ArcelorMittal (2006) 18 February 2002 Luxembourg City, Luxembourg Steel 32.611 billion (2005) 94,000[when?] www.arcelor.com

Successor(s) Founded Headquarters Products Revenue Employees Website

Arcelor S.A. was the world's largest steel producer in terms of turnover and the second largest in terms of steel output, with a turnover of 30.2 billion and shipments of 45 million metric tons of steel in 2004. Employing 4,10,000 employees in over 60 countries, it is a major player in all its main markets: automotive, construction, metal processing, primary transformation, household appliances, and packaging, as well as general industry. With total sales of over 30 billion, Arcelor was the world's largest steel manufacturer in terms of turnover. It produces long steel products, flat steel products and inox-steel.

Financial Position in 2005

COMPANY ARCELOR 2005 Sales $38.84 1-Year Sales Growth 8% MITTAL $28.10

27%

2005 Net Income $4.58 1-Year Net Income Growth

$3.37

-28%

Type Founded Headquarters Area served Key people Industry

Public 2006 Avenue de la Libert, Luxembourg, Luxembourg Worldwide Lakshmi Mittal (Chairman of the board and CEO) Aditya Mittal (CFO) Steel

Products
Revenue Operating income Profit Total assets Total equity Employees

Steel, flat steel products, long steel products, stainless steel, wire solutions, plates
US $124.9 billion (2008) US $12.24 billion (2008) US $9.399 billion (2008) US $133.1 billion (2008) US $59.23 billion (2008) 315,900 (2008)

ARCELOR MITTAL
Arcelor Mittal is now the largest steel

company in the world

ArcelorMittal is the leader in major global markets, including automotive, construction, household appliances & packaging The company is headquartered in southern Luxembourg City, the former seat of Arcelor Lakshmi Mittal (owner of Mittal Steel), a nonresident Indian is the Chairman and CEO
Headquarters at Luxembourg city

 It employs 4,10,000 employees in more than 60 countries ArcelorMittal key financials for 2007 show revenues of US$ 105.2 billion A crude steel production of 116 million tones, representing around 10% of world steel output As of May 17 2008, the market capitalization of ArcelorMittal was $144.37 billion

THE DEAL

INITIAL BID
January 14: Mittal talked to Arcelor CEO about

the deal. January 27: Mittal steel launches a bid of $ 22 billion. January 29: Arcelor rejected the offer.

HOSTILITY AND RACISM

hostility by Arcelors Management Board

racial discrimination
The CEO of Arcelor dismissed Mittal Steel as a

company of Indians

Increasing Offers and Pressure

April 19: Chief Executive Lakshmi Mittal calls

Arcelor Chairman Joseph Kinsch to ask for "friendly discussions'' April 28 : "significant corporate governance changes'' and revise the offer. May 4: Kinsch says the offer is "wholly inadequate'' May 9: Mittal Steel is ready to revise the offer and make corporate governance changes" May 18: Mittal formally launches its offer.

SEVERSTAL A NEW PLAYER

May 26: Arcelor announces a deal with Severstal June 2: European Union antitrust regulators approve

Mittal bid on condition. June 6: The European Commission approved the Mittal-Arcelor merger June 12: Arcelor rejects Mittal revised bid and recommends shareholders accept deal with Severstal. June 20: In a bid to woo Arcelor, Severstal revised the terms of its merger proposal

AGREEMENT TO MERGER AND FINAL MERGER

June 19: Arcelor cancels shareholder meeting

on share buyback June 21: Market regulators want more clarity on the state of talks with Mittal and Severstal June 25: Arcelor's board agrees to sweetened bid from Mittal worth about $32.3 billion. June 30: 57.95% per cent of Arcelor shareholders voted against the Severstal offer. They accepted Mittal Steel's $32.3 billion offer

AGREEMENT TO MERGER AND FINAL MERGER

June 19: Arcelor cancels shareholder meeting

on share buyback June 21: Market regulators want more clarity on the state of talks with Mittal and Severstal June 25: Arcelor's board agrees to sweetened bid from Mittal worth about $32.3 billion. June 30: 57.95% per cent of Arcelor shareholders voted against the Severstal offer. They accepted Mittal Steel's $32.3 billion offer

Terms Laid Down By Arcelor

New company to be called Arcelor-Mittal, and not

Mittal-Arcelor Majority of board members will be from Arcelor despite Mittals high stake The company will be headquartered in Luxembourg LN Mittal will be co-chairman along with Arcelor chairman Joseph Kinsch

Merger Process
2 step process
First step-Mittal Steel was merged into a ad hoc

subsidiary named ArcelorMittal Second step-ArcelorMittal was merged into Arcelor, which was renamed ArcelorMittal

Corporate Structure: Arcelor

Calculation of the Indirect Valuation of Arcelor Brasil

1. Determination of Arcelor Brasils Proportionate EBITDA contribution to Arcelors EBITDA

2. Determination of Arcelor Brasil enterprise value implied by Mittal Steel offer for Arcelor

3. Calculation of Arcelor Brasil MTO Reference Value per Share

Post Merger
Arcelor + Mittal = ArcelorMittal

Building our Company with the needs of future generations in mind

Market Position By Region

 Operations in more than 20 Countries.

Annual production capacity of 130 million tonnes

Produced over 116 million tonnes of steel. Steel shipments totaled approx. 110 million tonnes Generated revenues of US$ 105.2 billion. Announced 35 more acquisitions. Organic growth of 20 million tonnes. Unique R&D capability in the steel industry

Post Merger

Overview

Industry leader

Geographically diversified
EBITDA split by geography

Cost leadership

No 1 in automotive steel

As Per Today's Standing in NYSE Market

14.44 0.54(3.60%) Sep 28 Market Price on Closing of Day Market Cap: 22.37B P/E (ttm): 121.34 EPS (ttm): 0.12 Div & Yield: 0.64 (4.20%) Market Price fluctuation From 2008 up till today's date

Conclusion
Largest global player Smoothen out the price fluctuations Created a much stronger and more sustainable

business
Clear strategy to deliver further growth and value

creation
how the impossible Arcelor-Mittal merger

became possible.

Thank You