The Takeover of Arcelor by Mittal Steel

TEACHING NOTE

05/2013-5412 This teaching note was written by Martin Flash, Managing Director of Mega Associates, with the help of Professor Jonathan Story, Emeritus Professor of International Political Economy at INSEAD, and Professor James Burnham, Murrin Professor in Global Competitiveness, Donahue Graduate School of Business, Duquesne University, Pittsburgh, Pennsylvania, USA. It is intended to be used as an aid to instructors in the classroom use of the case “The Takeover of Arcelor by Mittal Steel”. Instructors can register and login at cases.insead.edu to access instructor-only material supporting INSEAD case studies (e.g., videos, handouts, spreadsheets, links).

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Summary of the Cases

Outline

There are two cases. Both concern the six-month battle in 2006 to create the steel group Arcelor Mittal, by far the largest steel company in the world, combining as it did the two largest companies. The takeover was of interest because it was the focus of three bitter debates: shareholder interests versus stakeholder interests, European champions versus global champions and the merits of either, and financial strategy versus industrial strategy.

The first case concentrates essentially on the political, financial and environmental issues (all in the wide sense) of the takeover. The second case looks more deeply at the specifically steel (and hence industrial) issues.

The Case Structure — Case A

The case is a more or less chronological retelling of events from start to finish. At the end of July 2006 Lakshmi Niwas Mittal (LNM) gets 92% of Arcelor. But:

• He has paid more than 44% more than initially offered. • He is the largest but not the majority shareholder. • He has a minority of board members (and Arcelor members are on record as disagreeing with disposal of Dofasco, a company Arcelor had recently bought that LNM wanted to sell). • The shareholder structure has gone from a structure of split voting (in favour of LNM) to a single vote per share. • He has now to show the value created, and bring the two companies together after a more than usually rough contested takeover.

The case is a vehicle for exploring shareholder versus stakeholder concerns, and managerial versus financial issues.

Appendices

• Details of the opening and final offers • Steel M&A activity • Industry note – Structure, changes, trade, politics • Abbreviated history of Mittal (& ISG) and Arcelor • Summary of the steel strategy debate – Arguments for consolidation • Defence of stakeholders • Bid and defence main features • Share price information • Severstal versus Mittal offer details

• Mittal advertising campaign • Arcelor Mittal main features

The Case Structure — Case B

Shortly after winning control Mittal has to consider what to do with Dofasco, the specialised company bought by Arcelor just before the battle. The reasons for and against disposing of Dofasco turn around arguments of size versus focus. The case is a development of the strategic issues in the steel industry encompassing the adjustments in the West, the rise of globalisation, and the emergence of the strategies of size.

Appendices

• Industry note – Industry structure, changes in industry structure, the politics of steel, the US market • Company histories – Mittal, Arcelor

Teaching Objectives and Target Audience

The cases are aimed at MBA students, and at students in executive programmes. The cases form a platform for analysing political (with both a small and a large P) and economic structures and forces, and how they impinge on company strategy. The second case is a vehicle for discussing the components of company and industrial strategy.

Case A

The case raises many issues, almost lessons in themselves, and not all need to be treated at once. The political establishments of France, Belgium and Luxembourg were caught flat- footed. Here was a European champion being challenged, and there was little they could do about it. What lessons should they draw from the exercise? The politicians had difficulty grasping that once corporations go out to the global capital markets they fall under different rules than if they were nationally supported. This is still an open debate in Europe.

Second, and related to the first point, is that the whole debate about stakeholder versus shareholder was posed, to the detriment of the former. The one stakeholder whose voice was not strident, in part because market control mechanisms exist, was the customer, and perhaps by extension the consumer. Their interests were nominally secured by required disposals in Europe and the US. Otherwise national governments, local governments, unions (sotto voce) and managers had a field day. Thierry Breton’s article in the appendices is certainly a respectable defence of the stakeholder position. But the defence lacks tools to implement it in international capital markets. Above all, if national interests are to be protected, this needs to be done before and not after a company goes out to international stormy waters.

Third, there is the issue of how growth is created in a company in a mature industry. This is the industrial issue behind the financial battle. It has of course a specifically steel dimension (see below). Mittal as an acquisitive company can demonstrate growth. Both companies (especially Arcelor) are rooted in the developed world, so must look to the emerging markets for growth unless they can demonstrate internal growth — essentially either market share increases or value increases in their existing markets. But the old world is where the large market shares are, and where the higher-value markets are located.

Fourth, one may take an interest in Guy Dollé’s tactics. As noted in the case, Arcelor knew it was a potential target. Could anything have been done to avoid this? Mittal’s union with ISG transformed its capability in 12 months. Dollé could plausibly be defended as being a devoted company man with a coherent vision that was a better industrial plan. He himself said that a merger with Severstal had always been his intention, but the timing was not of his choice. Was the Severstal merger idea therefore a straw man? From the documents produced to support it, it was clearly not a last-minute effort. Was the mistake just in the choice of approval process? Or could an industrial vision never have won out against the barbarian interests of international finance?

A minor but relevant issue is the difference between a merger and an acquisition. This is essentially a difference in premium. An acquisition has to show a premium, paid for out of synergies. In a low-growth industry such as steel, acquisitions pose problems, because in order to show value assets have to be written off (in the process of rationalisation). This means a strong balance sheet. This is only the case in periods of strong profits. Without growth mergers are realistically the only option. Acquisitions are feasible only if the company has profitable growth. Cyclical, growing only in developing markets, the steel industry is not an easy field for acquisitions (any more than any other mature industry).

Fifth, there is a more specifically steel or industrial analysis.

Case B

The direct issue of case B is whether to dispose of Dofasco. But more subtly the case poses the issue of whether size and its benefits will bring better shareholder returns than focus in the future. The two strategies are not mutually incompatible, but the main argument of Arcelor was that a focused, optimised company would produce better returns than a large, unfocused company, one that owed its success and growth to a long string of acquisitions. This contention has additional force when one reasons that Arcelor Mittal cannot now get much bigger. Antitrust laws will constrain it in Europe and North America, and nationalism will constrain it in China and Russia, leaving only the relatively small markets: Latin America, Africa, the Middle East, and of course India, the last with a very large un-privatised company not likely to be privatised soon.

The case cannot provide the answer. The jury is out on the central issue, and the evidence supporting Arcelor’s case is decidedly mixed; this is one reason it lost the takeover.

Teaching Approach and Strategy

The bid should be considered on the basis of three points of view: financial, industrial and strategic.

Financial View

The first, and probably the dominant one, is financial. From the perspective of financial markets, their view triumphed. The Arcelor board was forced to give full voice to the shareholders rather than impose their own view of what was good for the company. It was an object lesson in the force of international capital markets, even if at times the tactics were murky. Particularly noteworthy was the role of hedge funds, which claimed to speak for far more of the shareholding than in the end proved to be the case. Whatever the rights and wrongs of this, steel companies, indeed all companies, should take note, especially in Europe where the scalp of Arcelor can be added to that of Deutsche Börse (with the failed takeover of London Stock Exchange). In both cases the role of hedge funds (international capital) was decisive.

Industrial View

The second point of view is industrial. Did this combination make sense? On paper, with no integration or consolidation of significance, the arguments were decidedly mixed. In essence the Arcelor defence was industry-based: ‘We have a plan and a vision; we don’t need Mittal.’ ‘The Mittal bid is a financial construct, not an industrial plan.’ This point of view was defensible, but it ultimately stands up only if the financial point of view supports it. This of course is the logic of the market for corporate control, i.e., takeovers. From an industrial point of view the result is inconclusive. LNM never publicly changed his plan, which involved little reshuffling or rationalisation of assets. Even in an expanding market, many regard this as a vital component of a good steel company merger.

The original plan brought value in three years only through three types of synergy — purchasing, marketing and process — for a total of $1 billion.1 The final plan had a year-3 target for synergy gains of $500 million for purchasing, $470 million for manufacturing and process, and $570 million for marketing and trading, plus an SGA2 of $60 million. Dollé never won enough support for his plan with Severstal, which had a lot of industrial logic. Nor did he convince the outside world with his argument of having a higher proportion of value- added products, and hence being a different business.

Perhaps part of the reason for this was that Arcelor was unconvincingly different from Mittal, at least to the outside world. It was certainly more focused than Mittal, but not by enough to convince financial markets that it genuinely had a different approach. It was in too many low- margin products and in too many different products. Not least of the reasons for the lack of conviction was the proclaimed identity of strategy of each company, which was present from

1 In this context — and misleadingly, because it says as much about how the companies are organised and not whether they are over- or under-manned and hence the source of synergies — the Mittal head office in London numbers about 100 people, and the Arcelor main office in Paris numbers nearly 1,000 (plus those in Luxembourg). 2 Sales General Administration.

the start. Both companies were purveyors of the strategy of size. This is almost a subject in itself.

Strategic View

Clearly the strategy of being big triumphed, and whether it will prove to be correct will be answered only in the future. Others might argue that focus is a better strategy (although this does not preclude size). Running a low–value-added–product steel mill (hence emphasising productivity) is not the same job as running a high–value-added–product steel mill (hence emphasising quality). The argument for focus would be that product focus permits greater efficiency throughout the company, and clearly size has a role in providing a platform for optimising mill loadings (i.e., managing investments and assets), and for optimising and serving an international customer base (i.e., managing prices). In essence, focus could produce higher financial returns. The argument of size is that size itself is essential for confronting oligopolistic suppliers of raw materials (i.e., controlling costs) and for addressing concentrated customer bases (i.e., controlling prices), as well as for managing international economic imbalances. Thus the bigger one is, the better the financial returns. Whereas there is some evidence already for the former strategy,3 the latter is still to be proven. As Mittal himself has said, the steel industry’s record of profitability is not good.

The merits of consolidation were clearly one important issue. How far consolidation should go was still a debatable issue. Big equals good pleased the bankers and analysts who had been persuaded that because there were only three or four large iron ore suppliers worldwide (and not many more coke suppliers), the steel industry should be similarly structured. This was debatable for several reasons.

The first reason concerns price-fixing and cartel concerns. Quite apart from issues of where the market is and how is it defined, the question was ‘when is price discipline not price fixing?’4 How many companies per market do you need to stop this happening (although it is of course exactly what steel companies want to happen)?

Second, it is all very well concentrating in front of suppliers; what about in front of customers? Only two groups were cohesive (automotive and white goods), plus one that was vocal (construction). The first two groups (with their own problems) generally want at least four or five potential suppliers. And to be potential they have to be actual, i.e., get orders.

Third, at what point does big equal inefficient? Is this the correct direction for the steel industry to go? Both companies nominally have the same strategy of size and globalisation, so there should be no disagreement. The bid process has shown that this is too simplistic a view. One could characterise the growth of Mittal as the fruit of long period of privatisations, now largely (India and China excepted) complete. And the growth of Arcelor was a response to a need to consolidate (largely in Europe) and to find new growth (largely in Latin America) built round a tight product focus. For both strategies size is a driver, but this does not make them the same strategy, and the bid process showed this.

3 US Steel, SSAB and Voest-Alpine, for example. 4 An issue already raised by the Economist in ‘Spot the cartel’, 28th June 2003.

Finally, one argument related to size is what amount of raw material integration is ideal. Integrated companies should not, in theory, be any less profitable than non-integrated ones. Each related business should be pricing against outside benchmarks and selling on in the chain at these prices; so far, so theoretical. First, there may be tax reasons not to do this. Second, raw material converters (i.e., steel companies) get squeezed between input costs and output prices, most notably when prices change, which they do all the time. So the value of integration is security and reduction of volatility. How much integration is needed is a different issue.

Teaching Approach and Strategy

It is not necessary to teach both cases. Case A presents many of the teaching issues at a level of generalisation that makes it feasible in a half-day (including reading). Case B can used as background (for student or teacher) for case A, although for the student this may make for too much reading. Case B can be used in a further half-day (again including reading) if one wants to deal specifically with the industrial issues.

Both cases test the ability of the students to understand a complex situation, to identify the main forces influencing it, and to present a coherent account of the trade-offs involved. These difficult tasks are focused by asking the students to take a position: ‘what you do, or have done?’ The basic approach should therefore be of setting an analytical framework first, then working in groups around an analysis of the case, and finally conducting a class discussion around the results.

The challenge is framed by the case questions.

Case A. In addressing the questions below one should take into account the historical dimension as well the corporate, financial, political and global perspectives. The bid itself can be seen from a financial, an industrial and a strategic viewpoint. One should consider the main actors (people and organisations) and the tools at their disposal. 1. What was in this deal for Mittal? 2. What was at stake for Arcelor? 3. Evaluate the takeover: who ‘won’? 4. What challenges face the new Arcelor Mittal group going forward? 5. Would you invest in the new group, and in the industry?

Case B. How does one analyse an industry? How does one analyse markets? And how does one determine the best corporate strategy? One should develop a strong analytical framework around the case facts to address the following questions: 1. What are the major forces with which the steel companies have to grapple? 2. What are the alternative industrial strategies? 3. What would you do?

Two analytical frameworks are laid out in the next section.

Analysis

Political and financial analysis. Case A can be analysed using a six-force/four-context framework.

J.Story Strategy framework

Global system Economic input factors

Industry context Politics

Country context

Technology The Corporation Demography

Cultural & religious issues Markets

Forces

Politics For Arcelor there was intense interest from the countries where the steel industry was important, had been painfully adjusted in the past, and arguably had more adjustment in front of it: France, Belgium and Luxembourg. (Note that Spain was less vocal, for reasons about which one can only speculate.) Despite not being involved, there was an interest from India to see ‘one of theirs’ succeed. No interest at all at government level was expressed by the two other countries closest to Mittal, the UK and the US. Markets There was no pressure for this merger from the steel markets. However, both companies had proposed strategies of consolidation as the means to raise returns. There was resistance from the markets for some specific products where the combination would have created a dominant supplier — of structural beams in Europe, and of tin plate in the US. In the latter case this was one reason to dispose of Dofasco, but other Mittal North American facilities could also have been sold. Note that in automotive sheet, the product most discussed in the merger, there was no antitrust action. Technology Technology was not a major factor. Both companies had both major melting technologies (furnaces based on either iron ore or scrap). Arguably Mittal wanted Arcelor for its better technology. Mittal argued that a bigger company would have a bigger (undeniable) or

better (debatable) R&D effort. A bigger company would have more power vis-à-vis the steel equipment suppliers, who are very concentrated and who lead innovation, but as both companies were only renewing existing capital this was not important. Economic The degree of backward integration into raw materials, greater for input factors Mittal, was certainly a factor. European mills, having abandoned local national sources over the years, were at the mercy of the highly oligopolistic sea-borne suppliers of iron ore and coke. This was one of the arguments for larger scale. Competitiveness of local labour was not an issue, although the governments clearly were worried it might be. Steel companies consume a great deal of cash, and it was suggested that Mittal wanted Arcelor for its stronger cash flow (because it was better invested, hence over the cycle would at some stage be throwing off a lot). Demography For this end markets are a proxy. Arcelor, essentially European, was serving the high–value-added market for some of its mix, but this is mature and slow growing. For the balance of its mix it serves construction, which is slow-growing and cyclical. Mittal in North America has the same problems, but outside it, where it does not have the high-value market, construction is growing much faster. Neither group is in India and only very marginally in China. However, Arcelor is in Brazil, forever tomorrow’s market but currently quite promising. The European and North American markets have largely static populations (growing in the US, declining in Europe) but both with high per capita consumption of steel (400–500 kilograms/capita). The developing world not only has growing populations, but also very low per capita consumption of steel (50–100 kilograms/capita). Cultural and The merger was the clash of the religion of things European versus the religious religion of international capital markets. Alternatively one could issues express it as stakeholder capitalism versus shareholder capitalism. The merger showed how poorly thought out is the first of these. One can make arguments for both, but if a company with European values goes to the international capital markets for finance, the latter set the rules, unless the consequences have been foreseen with blocking minority votes, split shareholdings, etc. The clash was also between an essentially French engineer culture (applicable to all four constituent countries of Arcelor) and the international business, Indian family- cum-shareholder value Mittal culture.

Contexts

The Arcelor was a well-run company doing nearly everything right. corporation Unfortunately (and speculatively) this extended to its comfort with its host governments because of the social implications of rationalising the group. From a financial point of view, therefore, it was asleep. LNM, on the other hand, was by definition unencumbered by history, and on an acquisition roll. What made that even more dangerous was that he had a proven record as an industrialist.

The country The core country is France. It is Thierry Breton who defends stakeholders’ interests. And French thinking and training dominates the cultures of Wallonia (note that Arbed’s Belgian mills are in Flanders), Luxembourg and Spain. The culture is therefore of the enlightened engineer, and of a socially responsible corporation. The industry The steel industry is moving through a fast-changing time. Since the start of the 21st century the industry has privatised, gone global, concentrated, and gone through a boom (despite steep raw material price increases, which were simply passed on). This therefore is not a stable environment. Global The merger takes place as several systems clash. The raw material system oligopolies take advantage of the boom. The steel companies start to see the world as their oyster (not entirely correctly), the car companies continue to grapple with overcapacity by squeezing suppliers, and China is now a real bull in a china shop. One year it is pulling in large import volumes, the next year it is pushing out large volumes of exports, and its internal demand (and lack of raw materials) is pushing up everyone’s input costs. Its industry has gone from insignificance to one-third of world output in 10 years, and it is un-concentrated and anarchic.

Industrial analysis For case B an analysis based on Porter’s industrial forces is more appropriate. Porters’ five-forces analysis of an industry reposes like most analyses on definitions. What is an industry? In the case of steel there are some internal boundaries to keep in mind:

- Iron ore–based mills versus scrap-based mills (blast furnaces versus electric arc furnaces). Both mills can make all types of products. However, 20% of scrap demand comes from blast furnaces (which account for 65% of world steel). But the two mill types have different minimum scales by a factor of 4–5, blast furnaces being larger, not least because they are frequently integrated upstream to raw materials and downstream to finishing processes. - Flat products versus long products (a 60:40 split). Rolling mills are product-specific. Flat products are largely the preserve of blast furnace–based mills. - High–value-added customers versus low–value-added customers. The former (largely automotive, white goods and packaging — mostly flat products) are concentrated and demanding, but provide only some 20% to 30% of demand. Even specialised mills have to supply the fragmented balance of the market. - Scale. Steel is an intermediate product; there are industries between it and final demand (automotive stamping and forging plants, tube makers, processors, distribution, etc.). These companies are nearly always smaller-scale companies than steel companies. - Scope. Although a global industry (however defined), steel is fundamentally a low- value high–freight-cost product.

Large for seaborne iron ore, slightly less for seaborne coal, low Supplier power for scrap dealers (but not for scrap-rich countries).

Supplier concentration Only three companies control seaborne iron ore. Importance of volume Mining is a high–capital-investment business, hence volume is to supplier important initially. Marginal volumes are cheap. Differentiation of Very little, but enough to make switching costs significant. inputs Impact of inputs on Raw materials (roughly 2 tons of ore plus 1 ton of coke for 1 cost of differentiation ton of steel) constitute 60%–70% of final cost. Scrap input cost is similar. The raw materials provide no basis for differentiation. Switching costs of High both for reasons of the specificity of input and of volume firms in the industry availability with alternatives. Presence of substitute Poor-quality iron ore (e.g., France) can be substituted for high- inputs quality ore (e.g., Brazil). Otherwise there is no substitute. For scrap there are some ‘alternative iron units’, which generally are higher quality, but also higher cost. Threat of forward Almost none. The steel industry is too small and too fragmented integration for miners. And scrap merchants have better things to do with their money — e.g., put it on the horses! Cost relative to total Very large. Steel companies are raw material processors. purchases in industry Large as whole, and primarily of capital. A further significant Barriers to entry barrier to entry in high-value customers is time to get qualified.

Absolute cost New investment brings incremental cost advantages, but it is advantages rare to see advantages that cannot be imitated by purchasing the same equipment. Proprietary learning This can be significant (years) and requires huge working curve capital needs. But only for high–value-added customers like automotive. Access to inputs Generally not a problem except when commodities are tight. Government policy Generally a hurdle because no mill gets built without permissions, subsidies, etc., even in the US, where barriers are lowest. Economies of scale Very important, but offset by diseconomies of operation (inflexibility). A new mill may well represent more than 10% of a given product market. Capital requirements Significant, but what should one compare it with? Brand identity None, although good marketing should counter some of that. Switching costs For customers for value-added products these are high, but for everyone else they are low. Steels are made to standard specifications. Access to distribution Generally not a problem, but some geographic areas have greater numbers of independent channels than others. Expected retaliation Expressed nearly always in price terms.

Proprietary products Only in very few special products. Also customer requirements to have more than one source usually mean proprietary products are licensed. For certain high-value and high-volume (not always the same or Buyer power related features) customers it is high. Otherwise it is low.

Bargaining leverage For buyers in certain special segments it is high. And finding alternative volumes for steel mills is difficult. Customer lists tend to be stable. Buyer volume Per mill, per buyer this is surprisingly low except in dedicated facilities. Buyer information Usually extensive. As steel is an intermediate product both sides need the information. Brand identity Low. Price sensitivity For some intermediate users the steel cost can be 50% of their cost. For all it is an important input. Threat of backward None. integration Product differentiation On the physical product usually none, but on the extended product it can be real, although rarely enough to overturn a two- supplier policy. Buyer concentration Very great for automotive, white goods and packaging (plus a vs. industry few others) but otherwise low. Substitutes available Directly there are few, e.g., glass, plastic, aluminium in packaging, concrete in building (although it contains almost as much steel, but of a different type from a different mill). Indirectly wood or aluminium, but both with serious disadvantages. Buyers’ incentives Buyers are usually as much concerned with ensuring their smooth production as with shaving the prices of inputs. Relatively low. Aluminium is the biggest threat, but it is much Threat of more expensive, less strong and more volatile in price. Plastics substitutes are an alternative for some applications.

Switching costs Very high Buyer inclination to Generally low except over long cycles of product design. substitute Price-performance Entirely in favour of steel. trade-off of substitutes Between steel companies it is great. Degree of rivalry

Exit barriers High: social costs and stranded capital. Industry concentration Low but increasing, and varies greatly with individual steel products. Fixed costs/value Steel is by any measure a high–fixed-cost business. added

Industry growth In the West low, and in the new world high, but in both cases similar to GDP rates. Intermittent Frequent because capacity changes are lumpy, and old capacity overcapacity has long exit cycles. Product differences Very few, mostly intangible but real (e.g., service). Switching costs For most customers these are low. Brand identity None or low. Buyers will have company preferences. Diversity of rivals Very great on the product level. Corporate stakes Usually steel companies do nothing else. However, some are more invested downstream than others (e.g., in tube making).

Strategy options for steel companies based on this analysis could be the following:

Generic strategy Issues

Customers have varied needs: high– and low– Segmentation value-added products.

Focus mills on single (few) product Rolling mills can make and serve all types of segments (e.g., automotive sheet) markets, hence barriers can be low to others. Requires specific (dedicated) investment. Co-ordinate between proximate Freight costs (high). Inability to load mills with markets optimal order mix. Important but difficult to defend when clients Differentiation have multi-supplier strategies.

Exploit technical margins, i.e., make Increases cost, but brings real benefit. product more accurately than specified. Provide superior service. Emphasise Easily imitated; adds cost. Distribution channels tangible and intangible products. can blot out differences. Think of customer’s customer Adds marketing cost. Understand trade-offs (e.g., flexibility versus on-time performance). The lowest-cost producer is the survivor in the Cost leadership long run.

Integrate raw materials High capital needs. Insures against market fluctuations. High productivity and capacity Maximises capacity utilisation. Conflicts with the utilisation care and attention needs of making quality. Latest equipment gives lowest costs Capital needs, hence profits.

Additional Reading or References

HBS case: Mittal Steel in 2005: Changing the Global Steel Game This case deals with the growth of Mittal up to the Ukrainian privatisation. It is largely about how Mittal has been successful. Much of this is found in the case.

Draft article: ‘Why there never was, and never will never be, a European champion in the steel industry’. Isabelle Lescent-Giles. This excellent article shows the confusion of those who think that European entities acting on a world scale can somehow have an existence insulated from globalisation forces, exactly the clash between Arcelor and Mittal. The article is part of a project led by Harm Schroter of Bergen University and Franco Amatori of Bocconi, Milan, looking at the Americanisation of European business. Publication should occur in 2007.

Feedback

Students identify quickly the various interest groups involved (governments, management, politicians, press, banks, unions, shareholders), although they differ on ranking them.

Equally they pick up the culture clash between the new-world entrepreneurial Mittal (company and man) and the solid but historically compromised Arcelor.

In terms of who won, most agree the politicians did not. That leaves aside value judgements about stakeholder interests. Opinions differ on whether Mittal or Dollé won, but most agree that Goldman Sachs was a clear winner.

There is no clear answer on the industrial issue around Dofasco. The merits of either argument (scale or focus) will be seen only in the future. However, Mittal did not try hard to sell Dofasco. Most industry observers concluded he was glad of the excuse of the trust around Dofasco to be forced to look at other alternatives.

For the (potential) investor the issue was and is cash generation, but this takes one back to the industrial analysis. Will the focus on size, and on internal cost-cutting, produce a better answer than a strategy based on focus and high added value, remembering that neither Arcelor nor Mittal is strong in the growing markets?