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Mittal Steel

Mittal Steel is the world's largest and most global steel company, with shipments of 49.2

million tons and revenues of over $28.1 billion in 2005. They own steel -making facilities in

16 countries, spanning four continents. They employ 224,000 people spanning 49 different

nationalities. Their shares are listed on the New York and Amsterdam stock exchanges.

Mittal Steel has set the pace for the consolidation and globalization of the world steel

industry. They have taken on a range of acquisitions, many of them formerly public sector-

owned companies, and made successes of them. In the process they have spread best practice

and modern production techniques throughout their plants. Their capital investment

programme is unmatched in the industry.

Their 5000 strong customer base, spanning 150 countries, includes household names in the

automotive, engineering and appliance sectors. A force in every segment of the steel market,

Mittal Steel produces a broad range of high-quality finished and semi-finished products for

the flat and long products markets.

Mittal Steel is among the most efficient steel producers in the world. They encompass all

aspects of modern steelmaking, combining both integrated and mini-mill facilities and

producing much of the iron ore and coking coal used in their furnaces. They are also among

the most advanced steel makers, operating a range of modern technologies. They have

pioneered the use of direct reduced iron (DRI) as a raw material source and are now the

worlds biggest producer of DRI. With two technical research facilities, their product

development teams are ready to meet the needs of the most demanding customers.

Mittal Steel Growth Timeline

Year Acquired Description

1989 Iron & SteelCompany OfTrinidad & Tobago

A modern technologically advanced Steel Complex.Renamed as Caribbean Ispat.

1992 Sibalsa Mexicos Third Largest Steel Producer. Renamed as IspatMexicana.

1994 Sidbec-Dosco Canadas number four steel maker is bought from theGovernment of Quebec and renamed Ispat Sidbec.

1995 HamburgerStalwerke

Karmet

Germanys fourth largest producer of wire rod, renownedfor its mini-mill expertise and renamed as Ispat HamburgerStahlwerke.

The Group buys a 5.5 million tons pa blast furnace steelplant in Kazakhstan, renamed Ispat Karmet.

1998 Inland SteelCompany

Ispat International buys Americas fourth largeststeelmaker, Inland Steel Company and renames it IspatInland.


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1999 Unimtal Ispat International buys the French company, Unimetal

Group, including Trefileurope and SMR, from Usinor.

2001 ALFASID

SIDEX

LNM Holdings buys 70 per cent of ALFASID from theAlgerian government and renames it Ispat Annaba.

LNM Holdings acquires SIDEX, an integrated steelworks inGalati, being privatized by the Romanian government.Renames it Ispat Sidex.

2002 Business assistanceagreement signedwith Iscor

LNM Holdings signs a business assistance agreement withthe South African steel producer, Iscor. LNM subsequentlytakes control of Iscor in June 2004. Ispat Iscor has nowbeen renamed Mittal Steel South Africa.

2003 Nova Hut LNM Holdings signs an agreement to buy Nova Hut, thelargest steel producer in the CzechRepublic, from theCzech government. The acquisition, at an all -in cost of$905 million, takes ef fect in January 2003 and the

company is renamed Ispat Nova Hut.

2004 Polski Huty Stali

BH Steel

Macedonian facilitiesfrom Balkan Steel

Creation Of MittalSteel and ProposedAcquisition OfInternational Steel.

LNM Holdings buys a controlling holding in Polandsleading steel producer, Polskie Huty Stali, and renames itIspat Polska Stal (IPS). The company boasts a capacity ofover 6.5 million tons a year but is close to bankruptcy atthe time of acquisition.

LNM Holdings buys Bosnias BH Steel, committing itself tothe biggest ever investment in Bosnia by a foreigncompany.

LNM adds to its downstream activities in the Balkans withthe acquisition of hot and cold rolling mills in Skopje,Macedonia. The two mills, dormant for two years, arerenamed Ispat Skopje.

LNM Holdings and Ispat International announce theirmerger - to form Mittal Steel. At the same time, Mittal Steelannounces an agreed takeover of International SteelGroup of the US in a cash and shar es deal worth $4.5billion. Once the proposed acquisition is completed, it willcreate the worlds largest steel maker with a stock marketworth of around $21 billion and a combined capacity of 70

million tons of steel a year. The enlarged Mittal Steel wil lspan the globe with around 30 per cent of its assets inNorth America, 30 per cent in Europe and the remaining40 per cent split between Asia and Africa. ChairmanLakshmi Mittal declares his intention to make the Groupthe lowest cost steel producer in every market.


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2005 Acquisition of stakein Hunan Valin

ISG AcquisitionCompleted

Mittal Steel EuropeCreated

MDA with LiberianGovt.

Acquisition ofKryvorizhstal

MOU withJharkhand, India

Acquisition of Stelcosubsidiaries

Mittal Steel announces a share purchase agreement toacquire 36.67 per cent of Hunan Valin Steel Tube & Wire,one of Chinas top ten steelmakers with annual capacity of8.5 million tonnes. The move marks Mittal Steels entry intothe Chinese steel industry .

The acquisition of ISG is completed and the company ismerged with Mittal Steels existing US operation, IspatInland, and subsequently re -named Mittal Steel USA.

Mittal Steel restructures its European business, merging itswestern European operations with its central and easternEuropean operations to form one unified businessstructure Mittal Steel Europe.

Mittal Steel signs a mining development agreement withthe Government of Liberia, giving Mittal Steel access toabout one billion tonnes of iron ore resources in the westof the country.

Kryvorizhstal is acquired for $4.8 billion following a publicauction in Kiev. Kryvorizhstal is Ukraines leadingsteelmaker with annual steel production of 7.7 milliontonnes and more than one billion tonnes of iron oreresources. Company subsequently renamed Mittal SteelKryviy Rih.

Mittal Steel signs a Memorandum of Understanding withthe State of Jharkhand, India. Mittal Steel expects to invest$9 billion establishing mining and steel making operationsin the state.

Mittal Canada enters into definitive agreement for theacquisition of Norambar Inc., Stelfil Lte and Stelwire Ltd.from Stelco Inc. Transaction completed in February 2006at a cost of C$30 million

Arcelor

Arcelor was created by the merger of Aceralia, Arbed and Usinor, and thedetermination of these three European groups to mobilise their technical, industrial,and commercial synergies in a joint venture to create a global leader with theambition of becoming a major player in the steel industry.

Officially launched on February 19, 2001, the merger became effective on February18, 2002, when the Arcelor share was listed on several stock exchanges. The choiceof the name Arcelor was announced on December 12, 2001.

y Unites the worlds two largest steel companies with unrivalled global footprint.y Complementary assets and skills across all areas.y Creation of company with unprecedented scale and diversification to manage

cyclicality, stabilize earnings and increase shareholder returns.


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y US$1bn of estimated annual synergiesy EPS accretive transactiony Creates a powerful force in ongoing industry consolidationy A transaction that will redefine the global steel

Strategic Rationale for the Mergery Consolidation generates economies of scale, improved returns and a greater

ability to sustain investment in research and development.y The merged entity will immediately achieve industry leadership with a

production capacity of approximately 130 million tonnes a year and around 1 0per cent of world steel output.

y The combination will allow each company to fill its respective geographicalgaps.

y The combination of Mittal Steel and Arcelor will result in a steelmaker morethan three times larger than its nearest competitor and with ev ery chance of

reaching a production capacity of between 150 million tonnes and 200 milliontonnes within ten years.y Vertical integration with mining operations to provide a hedge against

fluctuating raw material pricesy Total value of synergies to be realized US$1.6 billion

Transaction Benefits

A Win/Win strategic proposition

For Arcelors Shareholders-

530

570

400

0

100

200

300

400

500

600

Marketing and Trading Purchasing Manufacturing & Process

Optimisation


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y Integrate Arcelor strength Into a stronger global network.

y -including #1 position in North America.

y Accelerate growth by accesing new markets in China, India, East Europe, Africa and

Central Asia.

y Improves margin and control costs through mining integration.

y Partnership with the most successful entrepreneur of the industry.y Realise US$1 billion of synergies.

For Mittal Steels Shareholders-

y Globalise North America added value leadership in west Europe.

y Reinforce low cost leadership position with South America.

y Gain undisputed technological and product development leadership.

y Reduce volatility with long term contracts and geographical diversification.

y Realise US$1 billion of synergies.

Key Risksy Contrasting culture of two companies

y The Steel Price may slow down

y Extent of synergies realized through the Merger

The Initial Bid and the Rejection

J

anuary 14: LN Mittal talked to Arcelor CEO Guy Dolle about the possibility of MittalSteel acquiring Arcelor. Guy Dolle categorically turns Mittal down.

January 27: Mittal Steel launches a formal takeover bid for $22 billion dollars.

January 29: Arcelor rejected the offer and the French government said it has "greatconcerns" about the merger. Arcelor has plants in France.

The market sent Arcelor's Paris-listed shares soaring 29%, to EURO 28.6. Mittalshares listed in Amsterdam closed up 6.2%, at EURO 27.63. Steel shares aroundthe world also rose.

Mittal said that Arcelor Chief Executive Guy Dolle wasn't positive about theapproach, but he was confident Arcelor's shareholders will back the bid.

A tie-up between the two companies would create a company with $70 b illion a yearin revenue and the most global production capacity in the industry. Arcelor isprimarily a European producer while Mittal is scattered around the globe.

The next largest producers after Mittal and Arcel or are Nippon Steel Corp andPosco.


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Mittal would become the leader in providing steel to the automotive industry inEurope and the U.S., and would lead in the North American Free Trade Area inappliances and packaging.

Hostility and Racism

There was a lot of hostility by Arcelors Management Board as they felt that MittalSteel was resorting to underhanded techniques to merge with them. They d ismissedthe idea of a merger with a "company of Indians" .

The European Union said it was against racial discrimination and the issue would betreated only on commercial considerations.

There was a lot of controversy where racist remarks were made against LN Mittal.

The bid stirred up passions amongst politicians, other leaders, and common man.With the European Commission being accused of protectionism and racism,Arcelor's CEO, Guy Dolle, offered a laundry list of ills in Mittal Steel because ofwhich the merger should not take place.

In London, a columnist forThe Guardian spoke of how the bid unleashed a newwave of 'economic patriotism,' adding that Mittal and his family were often portrayedas aliens -- 'the Indians' -- rather than as global entrepreneurs.

Increasing Offers and Pressure

April 19: Mittal Chairman and Chief Executive Lakshmi Mittal calls Arcelor ChairmanJoseph Kinsch to ask for "friendly discussions'' about revising his proposal in returnfor support from management.

April 28: Mittal tells Kinsch he is ready to make "significant corporate governancechanges'' and revise the offer.

May 4: Kinsch says the offer is "wholly inadequate'' a nd Arcelor has significantconcerns about the real value of Mittal shares.

May 9: Mittal Steel says it is ready to revise the offer and make corporategovernance changes "in the event of a recommended deal.''

May 10: Arcelor Chief Executive Guy Dolle describes as "insufficient'', Mittal's offerto revise its bid.

May 11: Arcelor says it has filed a lawsuit in the United States against Mittal forcopying a type of steel for the auto industry.


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May 12: Both companies announce better-than-expected results, although profitssuffer due to higher costs of raw materials. Arcelor toughens its stance, announcingplan to spend up to $9.5 billion to buy back almost a quarter of its shares.

May 18: Mittal formally launches its offer.

May 19: Mittal raises its offer by 34 percent, bringing it up to $32.90 billion and saysit would reduce the Mittal family's stake in the company.

Severstal A New Player

Severstal is a Russian company mainly operating in the steel industry, cent ered inthe northern city of Cherepovets. As such it is the second largest steel company inRussia, behind Evraz Group. The company is owned by Alexei Mordashov.

May 26: Arcelor announces a deal with Severstal that will give it a controlling stakein Russia's steelmaker and $16.4 billion for 32 percent of Arcelor.

June 2: European Union antitrust regulators approve Mittal bid on condition the newcombined steel giant sell off some of its facilities if the bid succeeds.

June 6: The European Commission approved the Mittal -Arcelor merger.

June 9: Arcelor confirms it has held talks with Mittal on the term of its bid.

June 12: Arcelor rejects Mittal revised bid and recommends shareholders accept

deal with Severstal.Arcelor says the revised offer still undervalues the company andurges shareholders to support the Severstal merger instead, but mandates its boardto explore possible improvements to the Mittal offer at a later date. Mittal says itwon't budge on price, but is prepared to make changes related to corporategovernance.

June 20: In a bid to woo Arcelor, Severstal revised the terms of its merger proposal,saying that majority owner Mr Alexei Mordashov would settle for 25 per cent of thenew group rather than the initially proposed 32.3 per cent and raised its offer byabout 2 billion.

Agreement to Merger and Final Merger

June 19: Arcelor cancels shareholder meeting on share buyback amid growingshareholder opposition.


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June 21: Market regulators in France, Spain, Luxembourg and Belgium suspendArcelor shares, saying they want more clarity on the state of talks with Mittal andSeverstal.

June 24: Talks on between Mittal Steel and Arcelor

June 25: Arcelor's board agrees to sweetened bid from Mittal worth about $3 2.3billion.

June 30: Paving the way for a merger between Arcelor and Mittal Steel, anoverwhelming majority of shareholders of the Luxembourg -based firm vote down amerger proposal from Russia's Severstal.

57.95% per cent of Arcelor shareholders voted against the Severstal offer.

In the process, they accept Mittal Steel's $32.3 billion offer, which was approved bythe Board of Arcelor on June 25 after a five -month long battle.

Arcelor had recommended acceptance of share and cash from Mittal Steel valuing atabout $32.3 billion, which creates a group with 3,20,000 employees producing about116 million tonnes of steel annually, accounting for about 10% of the world market.

Arcelor chairman Joseph Kinsch told shareholders that the long fight with Mittal wasworth it, saying the India-born steel tycoon L N Mittal and the markets had finallyrecognised Arcelor's "true value."

"We have created in five months more than EURO 12 billion in value," Kinsch said.

Snapshot View of the Merger

Transaction highlights

Arcelor Mittal: A merger of equals with shared management forsuccessful integration Ownership of 50.5% for Arcelor investors and 49.5% for MittalSteel investors

Recommended transformational merger of the worlds two largest steelcompanies with unrivalled global footprint

The undisputed industry leader

Creation of company with unprecedented scale and diversification tomanage cyclicality, stabilize earnings and increase shareholder returns

Annual synergies increased by 60% to 1.3bn (US$1.6bn)

The Combined Vision


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y Combination driven by simple and compelling industrial logic, spurring

consolidation in a fragmented industryy Creation of European-based global champion best positioned to

capture new market opportunitiesy New entity will capitalise on strong European herit age and presence, as

well as leading position in North Americay Enjoy unparalleled access to new high-growth markets: Central and

Eastern Europe, Africa, China and Latin Americay Company will be able to service global customers with broad and deep

product offeringy High level of direct access to raw materials making group more

profitable and less cyclical than most of its peers

The Combined Strategy

y

Consolidate regional high-end leadership into global customerplatformy Achieve industrial excellence through s tate of the art assets sustained

by sound capital expenditure and best in class R&Dy Realise commercial leadership through strong distribution channelsy Capture growth in BRICET countries, utilising existing leadership in

high-end products in mature economiesy Accelerate growth in key emerging markets such as India and Chinay Achieve cost leadership and operational excellence across productrangey Maintain high level of vertical integration to hedge against raw

materials price fluctuationsy Focus on people management and social responsibility

Strategy adopted by Arcelor to thwart Mittal bid

Declaration of dividend

On February 16, Arcelor declared a dividend to convince the shareholders of apositive situation under current management

The Russian Angle

To thwart the offer from Mittal Steel, Arcelor released a 16.6 billion Euro merger planwith Severstal, a Russian company

A Win-win transaction for all stakeholders


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From Mittal Point Of View

y Merger would take consolidation to a new horizon.y Successful distribution business in Europe.y Mittal Co. to have leadership position in high end segments in Western

Europe with strong R&D capabilities.y Low Cost slab manufacturing in Brazil that can be expanded for export to

Europe and North America.y Increased free float and liquidity

From Arcelor Point Of View

y Mittal Company will accomplish Arcelors stated plan in the most efficientway.

y Arcelor becomes a global player.y Operations in high-growth economies with low-cost, profitable assets and

local operating expertise in numerous emerging markets.y Leadership position in high-end segments in North America, with strong

R&D capabilities.y Access to very low cost slab potential in Ukraine to serve West Europe.y Access to raw materials and upstream integration.

Finer Details of Merger

y Shareholder voting rightsAll shares with identical voting and economic rights: One share - one voteregardless of holding period

y Composition of initial Board of Directorso Mr Kinsch to be Chairman, Mr Mittal to be Presidento Upon Mr Kinschs retirement, Mr Mittal becomes Chairmano The Board of Directors will be composed of 18 members, all non

executive (majority independent) 6 members from Arcelor 6 members from Mittal Steel 3 current representatives of existing Arcelor major shareholders 3 employee representatives

o After expiry of three year period, shareholders to elect Board of Directors

y Board Committeeso an Audit Committee composed solely of independent directorso an Appointments and Remuneration Committee composed of 4

members, including the Chairman, President and 2 independentdirectors

y Composition of Management Boardo The Management Board will be comprised of 7 executive members


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o 4 current Arcelor executives, CEO to be proposed by the Chairmano 3 Mittal Steel executives

Key Contract Terms

y Other offersArcelor has agreed they will accept no other offer for Arcelor shares unless it is asuperior offer for the entire share capital of Arcelor

o No break-up fee required in contracto If shares are issued under the Strategic Alliance Agreement, corporate

governance rules and certain other conditions terminate

y StandstillMittal family has agreed to a standstill at 45% of share capital. Exceptions incertain circumstances - consent of a majority of the independent directors or incase of passive crossing of such thresholds

y Lock upMittal family has agreed to a 5-year lock-up, subject to certain exceptions,including the right to dispose of up to 5% of the share capital after the 2nd year

Increased identified synergies

Marketing and trading (US$570m)

Accelerated growth of distribution in developing regions e.g., CEE, CIS, Africa Cross selling through enlarged and enhanced product portfolio Optimisation of order book for cross product flows and logistical savings

Manufacturing and process optimization (US$470m)

Benchmarking and best practice alignment across all operating assets Optimisation of utilisation of assets through selected mill product specialisation(e.g., productivity gains with better sequencing rates, fewer changeovers) Logistical and mill optimisation through transfers of semi finished products

Purchasing (US$500m)

Scale effects on standardisation of procurement contracts Optimisation and efficiencies from maintenance services, subcontracting, spareparts and consumables Logistics savings on optimisation of raw material flows

SGA (US$60m)

IT synergies Reduction in external contracts e.g., consulting services Duplication in commercial network avoided


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Comparison : Arcelor Mittal and Tata-Corus

Arcelor-Mittal Tata-Corus

EV/Tonne $710

EBITDA 4.5 times 9 times

Offer Cash cum StockSwap

All Cash

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