It's a value-for-money deal

Javed Sayed / TNN / Jun 27, 2006, 16:27 IST

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Aditya Mittal, president and CFO of Mittal Steel, is set to play an important role in Arcelor-Mittal as a member of the management board. Excerpts from an an exclusive interview.

Aditya Mittal, president and CFO of Mittal Steel, is set to play an important role in Arcelor-Mittal as a member of the management board. Soon after the press conference formally announcing the merger in Luxembourg, Mr Mittal gave an exclusive interview to Economic Times.
He replied to a host of questions ranging from when he thought the deal was going to happen to whether Mittal Steel had made too many concessions to Arcelor. Excerpts:
When did you feel certain that the deal had been clinched?
I was very confident of making progress when we finally got the opportunity to sit down at the table with Arcelor. As the talks progressed, Arcelor's management became more aware of our company's strategy and began to understand the industrial logic of our proposal. However, it was not until Sunday that we finalised the offer and got a confirmation that the Arcelor board had recommended it.

What were the main points of discussion in your meeting with Arcelor management last week?
We spoke about a number of things crucial to the merger, prominent among which were our business models and convergence thereof, benefits from integration, synergies and business plans over the next few years.
Why do you think the Arcelor management dropped its vigorous opposition to your bid? Was it because of the substantial revision of your bid price or was it because of pressure from their shareholders?

The financial revisions obviously played an important role, but I believe that sitting at the table and making the Arcelor board understand the merits of the proposed merger and how this quite simply was the best way forward for the future of both Arcelor and Mittal Steel was crucial.
Also, the shareholders of Arcelor played an important role in ensuring that the Mittal Steel offer got due consideration of the Arcelor management.
What role will you and your father play in the merged company?
Mr Mittal will be the president of the board of directors, and will succeed Mr Kinsch as chairman upon his retirement next year. I will hold a position on the management board.
Some say you have had to make too many concessions to Arcelor in terms of the company being called Arcelor Mittal, offer price, dilution of family control, number of Arcelor representatives on the board, etc. What is your view?
We have been committed to seeing this merger through to a successful conclusion. I do not feel that we have had to make too many concessions to get a recommendation.
We saw significant value in receiving the recommendation and were prepared to take that little step further. Through our discussions, for example, we have been able to identify additional synergies of $600m, taking the total to $1.6bn. The identification of additional synergies is clearly a benefit of being able to hold discussions with Arcelor.
While the Arcelor management has secured a good deal for their shareholders, I think that given the potential of the combined entity, the deal represents value for money for all concerned. We are confident that the transaction will also prove to be accretive for shareholders of Mittal Steel.
How do you see the merger reshaping the global steel industry?
The merger will reshape the industry since it combines the world's two largest steel companies and creates a unique company with unprecedented scope and scale, with leading positions in Nafta, Europe, Africa and South America. The financial strength will further support continued investment and growth initiatives. This company will be able to serve a full range of customer requirements across the globe and be at the forefront of technological advancements.
What are the benefits that will accrue to Arcelor-Mittal as a result of the deal?
The benefits are obvious. We have created an industry leader with the ability to shape the future of the global steel industry in years to come. Both companies have championed the need for consolidation and this marks a step in this process - creating a global giant that can help create an industry which can provide sustainable returns throughout the business cycle.

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