How Mittal was able to takeover Arcelor when later doesn't want that.Under what conditions it is possible?

Question

I want to know the legal issues that made possible for L.N Mittal for such forceful merger.

Answer 1

Under most Western nations' contract law, the sole issue is this:

the sharehholders of Mittal want to buy out the shareholders of Arcelor at a defined price.

management via the board of directors is obligated to notify shareholders with their recommendations

shareholders are obligated to make either an affirmative decision to sell their shares, an affirmative decision to keep their shares, or do nothing and let circumstances take their course.

The only issue is between shareholders not management.

All of that said, as a matter of practice, particularly in EU countries, there can be other issues, for example:

In the United States and to a lesser extent the EU, certain industries must be controlled by US shareholders for national security reasons. These are defined by law and are part of the contract between existing shareholders.

In the EU, employees have a right to their employment. Mittal will not be able to do mass layoffs or eliminate management. Likewise, some elements of the board in EU countries may be controlled by employees. In the US, contracts protecting management jobs make mergers difficult, not by blocking them but by making them unprofitable for shareholders, the so called "poison pills." Poison pills make the cost of firing a senior manager in a takeover so expensive that no purchase price will ever be worth it. They should be illegal but you would have to get all 50 states to create such a law or corporations would reincorporate in the states that do not have such laws.

Most western nations do not permit ex post facto laws, or the creation of laws to make a transaction illegal after the fact, however I am not sure that that is universally true.

Most western nations have anti-trust or other consumer protection regulatory structure that may need to approve a merger prior to the completion of the contract. Certain mergers cannot be made legally because it would either reduce competition (in the US) or drive other businesses out of the market (in the EU). The US, for example, requires insurance regulators of all affected states, to approve the merger of two insurers. Bank mergers require bank supervisory and sometimes Federal Trade Commission permission before they can occur. Air carriers and certain media organizations require special permission because they hold special licenses and the licences may not be transfered to new owners without permission.

Because steel is viewed as a commodity, the only regulatory issue would be if the combination would cause the control of the price of steel to pass to Mittal.

Answer 2

No legal issues. Mittal made an offer. Arcelor had to take note of the same. Officially they cannot reject on grounds of his nationality. Mittal increased his offer to their buy back price. Major shareholders supported the deal at the revised offer. Arcelor board has no choice but to recommend the deal. The opposition was from the management and the politicians. Not so much from the shareholders of the co.