The Mittal Steel-ISG Merger - Creating a Steel Behemoth (Part-A)

Ispat-LNM and ISG had a markedly similar mode of functioning. Both the Mittal companies and ISG had been built on the remains of other companies that had been in poor shape, and the companies also had a significant presence in the markets in which they operated.

Ispat and LNM had a strong presence in Western Europe, Africa and Asia, while ISG was the leader in the US. Therefore, when the companies announced their decision to merge, analysts felt it was a step in the right direction. The proposed merger was to be conducted in two stages. In the first stage, Ispat acquired LNM for $13.3 billion in stock, creating Mittal Steel...

The volume of shares traded also rose to more than 8.3 million from the company's average daily traded volume of 1.2 million. Not only did ISG's price rise, but there was also a considerable gain of about 27 percent in the publicly traded arm of the acquiring firm, Ispat. Commenting on the positive market reaction to the merger, Ross said, "I think that's Wall Street's way of saying that they think it's a good deal for both sides. Often what happens in a deal that involves issuance of stock, the target company goes up but the acquirer goes down, because they think they overpaid. Here that didn't happen."He further added, "It provides our shareholders with an excellent rate of return and the potential for strong future appreciation...