Mergers and acquisitions are two important vehicles for growth. Of late, there has been a spate of mergers and acquisitions happening globally. But not all of them are peaceful. Hostile takeover involves acquiring a company against its will. However, hostile takeovers arent always a bad thing to happen. The article looks at the recent hostile bid by Mittal Steel in acquiring Arcelor and looks at the reasons for such bids. It also discusses strategies to counter hostile takeovers.

In the late January 2006, Netherlands-based Mittal Steel, the world's largest producer of steel headed by the Indian billionaire Lakshmi N Mittal, had made an US$22.3 bn (¤18.6 bn) hostile takeover bid for the Luxembourg-based Arcelor S.A., the world's second largest steel producer. The resulting company following the merger would be the world's first 100-million-ton steel producing company and would be three times bigger than its nearest three rivals. At the time of the bid, Lakshmi N Mittal, Chairman and CEO of Mittal Steel, said: "The last ten years have seen a major shift towards consolidation of the steel industry, helping to create sustainable value for all stakeholders." The $22.3 bn hostile takeover bid for Arcelor is the first time Mittal steel has been involved in an unsolicited bid.

Following the offer, the Arcelor board and CEO voted unanimously to reject the offer and it was not just a polite refusal, which is usually expected from the polite and civilized Europeans; Arcelor recommended its shareholders not to sell their shares to Mittal, and asserted that the two companies did not "share the same strategic vision, business model and values."

Mittal Steel is the world's largest steel producer, with annual steel production of 49.2 million tons and revenues of over $28.1 bn in 2005. The company has steel making facilities in 16 countries spanning across four continents. The company employs about 225,000 people from more than 45 countries. Mittal Steel is among the most efficient steel producers in the world. The company produces a wide range of high-quality finished and semi-finished flat and long products. Its customer base is 5000 strong and spans across 120 countries and includes automotive, engineering and appliance sectors. Mittal Steel has spearheaded and set the pace for the consolidation of the world steel industry through a range of acquisitions across countries, mainly poorly performing public sector companies, turning them over and making them successful and profitable. Mittal Steel's capital investment program is unrivaled in the world steel industry.

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