Challenging the Status Quo: Steel Producer Case Study on the Enterprise Value for M&A

Mădălina Viorica MANU, Vlad BRĂTĂȘANU, Ilie VASILE


The purpose of this paper is to analyze the enterprise value determinants, in order to help the interested parties make correct (investment) decisions by studying industry cases of mergers and acquisitions (M&A). In order to understand and identify value-adding opportunities for the companies, the paper investigates a divestiture within a major international steel group. The research questions refer to the understanding of the relationship between the enterprise value and market capitalization of the selected companies acting in the steelmaking field, including other factors such as the revenue, EBITDA, EPS or ownership structure. In order to understand how the enterprise value is determined, we have analyzed relevant theories, including Tobin’s Quotient (Q) for a company/ aggregate corporation, for the study of the relationship between the market value and its replacement value. If used empirically, Tobin’s q helps avoid issues of estimating shareholders’ risk-adjusted required return by the market prices. However, Q is not (yet) used in practice in the valuations of companies, because of the lack of the necessary input data. Besides using the graphical visualization of the share price, we have used the datasets available for several years on the value of several mature steel producing companies, market capitalization, and other indicators. The methodology also includes Market Comparable method and own spreadsheet calculations. After analyzing the evolution of the share price for the global steelmaking leader (ArcelorMittal), between 2009 and 2018, we have not identified any growth potential; the market value of ArcelorMittal is a proxy for the market value of its assets.

Full Text:



(2016). In A. Omarini, Retail Banking: Business Transformation and Competitive Strategies for the Future. Springer.

Acuris. (2018). Global & Regional M&A Report 2018. Retrieved 01 2019, from

ADVFN. (2018). ArcelorMittal. Retrieved 2018, from

ArcelorMittal. (2015). Annual review 2015. Retrieved 2019, from

ArcelorMittal. (2016). Business strategy. Retrieved 02 2019, from

ArcelorMittal. (2017, 11 28). Digital transformation at ArcelorMittal Europe - what, why and how we’re doing it. Retrieved 2019, from

ArcelorMittal. (2018, 11 1). ArcelorMittal completes transaction to acquire Ilva S.p.A. and launches ArcelorMittal Italia. Retrieved 12 2018, from

ArcelorMittal. (2018). Investors. Retrieved 2018, from

ArcelorMittal. (2019). Our history. Retrieved 01 2019, from

ArcelorMittal. (n.d.). ArcelorMittal submits proposed divestment package to European Commission. Retrieved 06 2018, from Press releases:

Arikan, A. M., & Stulz, R. M. (2016). Corporate acquisitions, diversification, and the firm's life cycle. The Journal of Finance, 71(1), 139-194.

AYDIN, N. (2017, 05). Mergers and Acquisitions: A Review of Valuation Methods. International Journal of Business and Social Science, 8(5), 147.

Bauer, F., & Matzler, K. (2014). Antecedents of M&A success: The role of strategic complementarity, cultural fit, and degree and speed of integration. Strategic management journal, 35(2), 269-291.

Bloomberg. (2012, 04 03). Steel Prices: The Downside For Steel Stocks Is Already Priced In (SLX, NUE, X, TX, MTL, TKR). Retrieved 02 2019, from ETF Daily news:

Bloomberg. (2017). Steel’s surprising surge is far from over, Arcelor says. Retrieved 2019, from

Brooks, C. (2014). Introductory Econometrics for Finance, 3rd ed. pg.3, United Kingdom: Cambridge University Press.

Brunnermeier, M. K. (2015). Asset pricing I: Pricing Models.

CFA Institute. (2017). CFA Program Curriculum 2018 Level III. John Wiley & Sons.

CMS. (n.d.). 2017. Retrieved 2019, from

Damodaran, A. (2004). In A. Damodaran, Investment Philosophies and Investment Fables. New Jearsey: Pearson Education, Inc.

Damodaran, A. (2012). Investment Valuation: Tools and Techniques for Determining the Value of Any Asset, 3rd ed. New Jersey: John Wiley & Sons.

Damodaran, A. (2012). Professor Aswath Damodaran's Target Company M&A Screen.

Damodaran, A. (2018). Financial Ratios and Measures. Retrieved 04 2018, from

Damodaran, A. (n.d.). Acquisition Valuation. Retrieved 01 2019, from

Damodaran, A. (n.d.). Financial Ratios and Measures. Retrieved 04 2018, from

Drucker, P. F. (1969). The Age of Discontinuity. Retrieved 12 2018, from

Erickson, T., & Whited, T. M. (2006, 09). On the accuracy of different measures of q. Financial Management. Retrieved 01 2019, from

EY. (2017, 05). M&A appetite rebounds with renewed economic confidence. Retrieved from$FILE/ey-ccb-p-u-16-edition.pdf

Groß, K. (2007). Equity Ownership and Performance: An Empirical Study of German Traded Companies. Springer Science & Business Media.

Haleblian, J., Devers, C. E., McNamara, G., Carpenter, M. A., & Davison, R. B. (2009). Taking stock of what we know about mergers and acquisitions: A review and research agenda. Journal of management. Journal of management, 35(3), 469-502.

Hillman, A. J., Withers, M. C., and Collins, B. J. (2009). Resource dependence theory: A review. Journal of management, 35(6), 1404-1427.

Jensen, M. C. (2002). Value Maximization, Stakeholder Theory and the Corporate Objective Function. Business Ethics Quarterly, pp. 235-256.

Johnston, S. (2018). Largest companies 2008 vs. 2018, a lot has changed. Retrieved 12 2018, from

Jovanovic, B., & Rousseau, P. L. (2002). The Q-theory of mergers. American Economic Review, 92(2), 198-204.

Knight, J. (2016). Valuation: The EBITDA Multiple Method. HBR Subscriber Exclusive.

Levine, O. (2017). Acquiring growth. Journal of Financial Economics, 126(2), 300-319.

Macroaxis LLC. (2018). ArcelorMittal Profile. Retrieved 2018, from

MANU, M. V., & VASILE, I. (2017). How much is the listed enterprise worth? Theoretical and Applied Economics. Special Issue, XXIV(special), 77-82.

Mihaljevic, J. (2010, 09 21). EQUITIES AND TOBIN’S Q. Retrieved 2018, from

Mihaljevic, J. (2014, 04). Uses and Misuses of 7 Key Valuation Ratios. Retrieved 2018, from

Moody's. (2014, 11 20). Moody's Investor Service. Retrieved 12 2017, from

OECD. (2015). Addressing the Tax Challenges of the Digital Economy, Action 1 - 2015 Final Report. Retrieved 12 2018, from

OECD Steel Committee. (2009, 07 9). Presentation for the Council Working Party on Shipbuilding. Retrieved from

PwC Romania. (2017). Valuation multiples in the context of Bucharest Stock Exchange and local M&A market. Retrieved 12 2018, from

Reuters. (2018, 06 21). Exclusive - JSW Steel plans bid for ArcelorMittal's Romanian plant. Retrieved 2018, from

Reuters. (2018, 06). Italy delays handover of Ilva steelworks to ArcelorMittal. Retrieved 06 2018, from

Shleifer, A., & Vishny, R. W. (2003). Stock market driven acquisitions. Journal of financial Economics, 295-311.

Singh, A., (2015). New Perspectives on Industrial Policy for a Modern Britain. In D. Bailey, K. Cowling, & P. Tomlinson (Eds.), New Perspectives on Industrial Policy for a Modern Britain (p. 345). Oxford: OUP.

St. Edward’s University. (2018). WHY GREAT LEADERS CHALLENGE THE STATUS QUO. Retrieved from

Toma, M. (2011). Inițiere în evaluarea întreprinderilor. In CECCAR (Ed.). București: CECCAR.

TopFirme. (2018). Top firme Judetul Galati. Retrieved 12 2018, from

Wartzman, R. (2014). What Peter Drucker Knew About 2020. Retrieved 12 2018, from

Wereda, W., & WOŹNIAK, J. (2018). The Way to Organizational Excellence of Innovative Enterprises Through Communication with Stakeholders. Strategica - Challenging the Status Quo in Management and Economics (p. 917). Bucharest: Tritonic Publishing House.

Yahoo Finance & Morningstar, Inc. (2018, 06 29). Retrieved 2018, from

Yahoo Finance. (2019). ArcelorMittal (MT). Retrieved 2019, from


  • There are currently no refbacks.

Copyright (c) 2019 Management Dynamics in the Knowledge Economy

Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.

© Faculty of Management (SNSPA)

Creative Commons License
This work is licensed under CC BY-NC

The opinions expressed in the papers published are the authors’ own and do not necessarily express the views of the editors of this journal. The authors assume all responsibility for the ideas expressed in the materials published.

ISSN 2392-8042 (online)