I have been somewhat out of touch...I am doing some consulting / touring in China (the pollution in Shanghai is even worse...).
Everyone is just now realizing that:
1. Mittal only cares about being bigger...no matter what premium he pays; hell, he even pays a premium at the top of the market!!!
2. Arcelor used and abused Mittal; specifically, they played hardball and got the son to pay a 90% premium....
3. Aditya gets put on the management board; that may be the single biggest sign. He gets a promotion after the way this merger was handled....is the daughter going to be the Chairwoman of the Board??? I remember back to arguements about corporate governance....now those making the arguments are gone or looking to sell.
4. For the next year the company is basically Arcelor...however, between now and when Mittal takes over the board...the management will start slowly changing. Just like DCX...if you are an Arcelor shareholder, and want to see the Arcelor business model continue....too bad, you should leave soon.
5. MT has, and will continue to underperform the true market leaders (unless steel prices rise less than iron ore prices) ....I have said this for years; and it is still true. NUE is still the best stock in the group...with the cavaet that STLD and X could bounce quicker....but with the supplemental dividend, NUE is even tougher to beat.
6. Risk...although MT lowered its country risk; the debt keeps the stock riskier than it peers.
Well....Rockey, TodlyCEO, Dealaw....I am waiting to hear your responses? Isn't the new company even larger (more bull_hit synergies; more ability to bull_hit ability to control pricing); isn't the company even more 'global' (Mittals buzzword of 2003...just like DRI was the Mittal buzzword of the late 90s). What has changed with the company's strategy so that you know want to sell????
The sad part is I didn't short the stock when the merger started; but I didn't think they would get Arcelor, because I didn't think any fool would pay the premium they did.....I was wrong. I would have like to gotten the lead Investment bank comission on this deal!!!
BTW....I actually see the new combined company having a shaky quarter or two...but it might actually make decent money over the next 1-2 years if the market holds. They overpaid, but Arcelor still had some very good assets.
Talking about BS, this post by Steelwatch is one giant ES (Elephant shit)
18 aug NUE $ 51.58 / 18 aug MT $ 32.10
25 sept NUE $ 47.17 / 25sept MT $ 32.30
Stick with you're favorite loser as much as you like!
This guy is a known LIAR
So where is this lie...Did I say from "August 19th to September, 26th (excluding dividends) that NUE will surely outperform MT"....I don't think that is what I said.
You are simply a pathetic 'pumper' of this stock...at one time I assumed your poor command of the english language was part of the problem...but that is not the case.
Look at the charts...then add in the NUE regular and supplemental dividends...and see who is ahead??
BTW...NUE also doesn't have to come up with another $5B in cash to buy even more assets at the top of the market!!!
I just don't know who is the bigger joke...you, or the MT management team (at least they got their LNM cash) so I guess it must be you!!
While I tend to agree that the company could be much better run, the fact of the matter is,a combined Mittal-Arcelor is currently trading at around half the industry average EV/EBITDA.
The industry leader, with higher margins than the industry, should not be trading at half the industry, even if there are some management issues, and even if they overpaid for Arcelor.
Yes there are better companies, NUE being the obvious, but Mittal still has plenty of value once near term integration issues/uncertainty are dealt with.
Well, I have just one question to ask: Why do you use EV as a measure of a company that is not for sale???
Why would you use EV for any valuation, other than the full cost of an acquisition?? You do know that IF Mittal-Arcelor takes on $50B in debt tomorrow, their EV would double....but I don't think that makes them a better company...nor would it help the stock price!!!
There is no use arguing with the idiotCEO, he knows nothing....but I would love to hear your reasoning for using EV???
Excellent post !
Good to hear from you again . . .after such a long time.
I made money off Mittal. . .by buying Arcelor ADR's. Late in the game. . .but still did OK for a "quickie".
Bought ADR's (ARLOY.pk) @ $45. Dumped MT shares immediately @ $34. Total return (proceed from sale of MT shares plus cash portion of exchange offer)somewhere north of 10%. . .perhaps, 12%
Re your statement:
>> NUE is still the best stock in the group<<
I tend to agree with you.
Btw, what is your opinion of CHAP and OS ??
Would love to hear it !!!
1. The transaction will be accretive. MT paid about the same enterprise valuation for Arcelor that MT was trading at. Arcelor was seriously undervalued by the market prior to the MT bid, and MT tried to take advantage... but ended up not getting a steal.
2. See #1
3. Mittal does not have majority control. He can only stack the board his way when the time comes if he can convince others of his logic.
4. See #3
5. MT has underperformed. NUE is overvalued, with substantial exposure to the overheated nonresidential construction market. X is the best buy here IMO.
6. The debt risk is balanced by the substantial diversification of the company. They do have a problem with iron ore exposure, but in time that will be reduced with development of their mining assets. They ought to be in good shape unless a serious downturn starts this year.
Most of the arguments aren't even worth responding too...even Rocky knows they are BS..
But, you might want to look at your enterprise value calculation again...and how you use it!!!
1. Add about $8B for the Brazil assets...I guess Aditya forgot to tell the old man about that one!!!!
2. Are you including the cash that Arcelor said they would pay out...plus the Dofosco transaction?? My numbers are not anywhere near yours!!!
3. How do you define the transaction as being accretive??? Does debt payment go up in your model???
Thanks for a great posting! A very fitting description! People are becoming worried sick because they know they are going to lose a lot of money in MT. They can't sleep, can't eat. The only thing they can do at this point is to write rude, irrational postings!
There are a few "traders" on this board that still advocate FBI (faith-based investment). But their blind faith won't save them, that's for sure. I personally prefer VBI (value-based investment). Much more reliable and rewarding!