Mergers And Acquisitions

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Mergers and acquisitions (M&As) have been for decades a popular strategy for organizations to grow globally. The goals are to produce economies of scale (Shelton, Hall, & Darling, 2003), increase profitability and market share (Cartwright & Cooper, 1993a), and to achieve synergy (Cartwright & Cooper, 1993b; Shelton et al., 2003). It is an effective way of achieving rapid corporate growth, penetrating into new markets, and gaining a number of other strategic and competitive advantages.
Moreover, cross-border mergers and acquisitions are a large component of global foreign direct investment (FDI) activities according to the United Nations Conference on Trade and Development. Indeed, Global FDI activity was at its peak at US $1.7 trillion during …show more content…

Fortunately, some organizations successfully complete cross-border mergers and acquisitions thanks to a great management of cultural issues. They understand that cultural fit is often as important as financial and strategic issues in the objective of achieving a successful deal. Furthermore, cultural differences of two companies, if assessed, managed, and integrated well, can be a source of value creation, synergy, innovation, and learning, as exemplified by the successful merger of Renault and Nissan, and the one of Arcelor and Mittal Steel.
In this report, we will present you the ArcelorMittal merger in order to highlight the main features of cross-border mergers from a cultural perspective. It is rooted in academic researches that poor culture-fit or lack of cultural compatibility is a key reason for M&A failure, but it is also recognized that diversity in culture can reversely be a key driver of growth, innovation or synergy. This paradox of cross-cultural mergers and acquisitions convinced us that it is paramount for companies to understand cultural issues underlying their M&A deals.
First, we will present the business opportunities and challenges that Arcelor and Mittal Steel coped with during the merger, and the various stages of the …show more content…

The management has for example constantly tried to discredit Mittal Steel. Presented as a “company of Indians”, the steel giant was accused of producing cheap steel.
Moreover, CEO Guy Dollé had personal issues with Lakshmi Mittal and presented its offer as “150% hostile”. According to him, Lakshmi Mittal was not sharing European “cultural values” and was suffering from “mono-cultural management”. He has also strongly criticized Mittal Steel’s corporate governance: the fact that Mittal’s family members were taking part of the management was pointed out several times.
India has also played a role during the merger. Despite the fact that Mittal Steel was a European company, some Indians – but not Lakshmi Mittal – thought that the deal was curbed due to the nationality of Mittal Steel’s CEO. Even the Indian government, through its Commerce Minister Kamal Nath, raised this presupposed racist issue in numerous forums. And due to oppositions to the deal, India had even threaten Luxembourg not to ratify a specific taxation accord.
Finally, Mittal Steel has seized the opportunity to acquire Arcelor despite big

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