Arcelor
| Arcelor SA
|
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|---|---|
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| legal form | Corporation |
| founding | Arbed 1882 Aceralia 1902 Usinor 1948 Arcelor 2002 |
| Seat | Luxembourg |
| management | Lakshmi Mittal (CEO) |
| Number of employees | 94,000 (2005) |
| sales | 32.6 billion euros (2005) |
| Branch | Manufacturing |
| Website | www.arcelormittal.com |
Arcelor SA was the world's second largest steel producer until 2006. In 2006 Arcelor was taken over by competitor Mittal Steel Company and merged to ArcelorMittal in 2007 .
Company history
Arcelor was based in Luxembourg and was created in 2001 through the merger of the Spanish Aceralia , the Luxembourg ARBED and the French Usinor . In 2002 Guy Dollé became head of the company. After the successful hostile takeover of Arcelor by the Mittal Steel Company in June 2006, Lakshmi Mittal took over the position of managing director.
Key data
Arcelor was the world's largest steel producer in terms of sales and the second largest in terms of tonnage. In 2003 sales were 25.923 billion euros and resulted in a net profit of 257 million euros. In 2004 sales rose by 16.4% to 30.176 billion euros with a net profit of 2.314 billion euros. In 2005 sales increased by a further 8.1% to 32.611 billion euros with a net profit of 3.846 billion euros. In the first quarter of 2006, sales were EUR 9.565 billion, which is an increase of 17.3% compared to the first quarter of 2005.
Crude steel production in 2005 was 46.7 million tons. Of the three German Arcelor plants Stahlwerke Bremen , Ekostahl Eisenhüttenstadt and Maxhütte Unterwellenborn , the first two now also belong to ArcelorMittal, the third was sold to the Brazilian Companhia Siderúrgica Nacional (CSN).
The company employed approximately 96,000 people in over 60 countries (as of December 31, 2005). The activities of the Arcelor group extended to the areas of long products, flat products, stainless steels and the area of processing. The main markets were the automotive, construction, packaging, household and general mechanical and plant engineering sectors.
Corporate strategy
Arcelor assumed that in a few years five to six companies would dominate the steel industry. This should counteract the oligopolies of raw material suppliers and buyers. Therefore Arcelor was interested in taking over steel companies outside of Europe. The focus was on Brazil , Russia , India and the PR China .
On January 24, 2006, Arcelor announced that it would take over Canada's largest steel producer Dofasco for the equivalent of around 3.95 billion euros after ThyssenKrupp had not submitted a new bid in the bidding contest. The takeover of Dofasco finally took place on February 21, 2006. Arcelor had grown by 11,000 employees and around 2.7 billion euros in sales.
Acquisition by Mittal Steel Company
On January 27, 2006, the world's largest steel group, Mittal Steel Company, announced that it would bid 18.6 billion euros for the takeover of Arcelor. This would create a new steel company with a crude steel production of over 120 million tons per year. At the same time it became known that after a successful takeover by Mittal, the Canadian company Dofasco, which had just been acquired by Arcelor, was to be sold on to ThyssenKrupp . The purchase price was roughly equivalent to the cash portion of the offer for Arcelor. This was intended to counter the objections expected from American antitrust authorities. On January 29, Arcelor's board of directors announced its intention to avert the hostile takeover. He advised the shareholders not to sell to Mittal. The Grand Duchy of Luxembourg, as the largest single shareholder, also rejected the first takeover offer.
To fend off the takeover, management tried to convince shareholders that they could expect higher profits with a standalone Arcelor. Therefore a business plan was presented which provided that 30% of the cash flow would be distributed to the shareholders. As a consequence of this strategy, the dividend for 2006 , which had already been set at 1.20 euros, was increased to 1.85 euros and shareholders were given the prospect of an additional payment totaling 5 billion euros within one year. The total then distributed thus exceeds the cash portion of the takeover offer offered by Mittal.
To defend against the takeover by Mittal, Arcelor had transferred its shares in Dofasco to a foundation under Dutch law, which should make a sale of Dofasco practically impossible after a hostile takeover. Mittal can no longer compensate for the cash portion of its offer. In addition, the acquisition would likely not be approved under competition law in North America. On the other hand, it also reduces Arcelor's ability to continue to actively participate in the transformation of the steel industry.
On May 19, 2006, Mittal increased the takeover offer to 26 billion euros. At the same time Mittal offered the Arcelor shareholders higher premiums and granted the Luxembourg government concessions, such as the relocation of the headquarters from Mittal to Luxembourg. At the same time, Arcelor called a shareholders' meeting to buy back Arcelor shares worth 5 billion euros. Since this meeting did not have a quorum, the decision on further defense measures had to be postponed to June 2006.
On May 26, Arcelor announced that it wanted to merge with the Russian steel group Severstal , whereby the new group would replace Mittal as the largest steel group.
On June 11th, the Arcelor management rejected Mittal's increased offer and recommended that its shareholders merge with Severstal, but agreed to discuss a new offer with Mittal Steel.
On June 25, the Arcelor management agreed to a further increased offer from Mittal Steel amounting to 25.4 billion euros; Mittal and Arcelor have now become Arcelor Mittal , by far the world's largest steel producer. Arcelor Mittal will be listed in the CAC40 financial index from November 2006 instead of Arcelor .
Stock trading
The company's shares (ISIN LU0140205948, symbol ARR) were traded on the Paris , Brussels , Madrid and Luxembourg stock exchanges. 85% of the shares were in free float . The largest single shareholder was the State of Luxembourg with 5.6% .
Flat steel production facilities
The main production sites for flat steel products are in Gent Zelzate, Dunkirk , Gijón , Fos-sur-Mer , Liège , Charleroi , Florange , Vitória (Brazil), Bremen and Eisenhüttenstadt .
