Author: D. Woodley
Abstract
The potential take-over of Salzgitter by the Luxembourg steel group Arbed is the culmination of a
flurry of merger, acquisition and restructuring activity in Europe over the past two years. The purchase would create a 25m tonne crude steel capacity producer, the largest in Europe and in the top three world-wide. The scale of corporate restructuring has been significant, marked not least by the merger of Thyssen and Krupp‘s flat steel operations in March 1997, the acquisition by Arbed of a 35% stake in Spanish steelmaker Aceralia and the Usinor acquisition of Belgian steelmaker Cockerill Sambre in Autumn 1998. Restructuring has also involved smaller scale consolidation, for example the Hoogovens acquisition of Gustave Boel and Ispat’s purchase of Thyssen’s long product facilities at Hochfeld and Ruhort, and there are more underway. Considering the pace and apparent scale of the recent industry consolidation, it is expedient to review its results, implications and efficacy. To what extent does restructuring address the inherent value destruction in the European steel industry, and how might the consolidation effect a reconciliation between strategy and the Challenge of value creation?
