Mittal-Arcelor

The recent Mittal Arcelor issue has every shade to become next Yash Chopra pot boiler in Bollywood. From start I was following the deal closely, as something inside me was telling me that an Indian has come of age. This time his audacity ceased no bounds. The man, Lakshmi Mittal, showed the temerity to make an attempt for hostile take over for its near rival company, Arcelor. This news itself was shocking and came as bolt from the blue for both Arcelors and common people. Mittal till now was known for takeovers, but only for sick steel companies which he used to turn around. The takeover made Mittal face with immediate repercussions from Arcelor clan. Mittal was sullied, where everything from his quality of products, corporate governance, racial identity was questioned. The man of steel, Mittal , stick to his guns. Mittal made all efforts to see the deal through but the adamancy of Arcelor board was not giving any room for compromise. But the biggest mistake Arcelor then committed was calling in a white knight, Silverstal. (White Knight is a company which is called by a company which is under takeover threat to save it from the take over).But, the man with lots of grey hairs and grey matters in Steel business realized the biggest mistake done by Arcelor board. As the decision was taken unanimously by Arcelor board members without considering other share holders, the major percentage of share holders started sulking. Adding more to it, Silverstal, Russian company was never looked at in the good eyes by Europeans. As Russia has always been known for poor corporate governance and formation of Cartels which hijacks the smooth business. Finding the niche Mittal started taking all the Shareholders in his side and when he had 30% Shareholder backing him he revised the bid to make it look more attractive. Now with major shareholders backing Mittal, Guy Dolle and clan(Arcelor Board) had no other option left but to succumb to Mittal. To make the deal look perfect it was then called the merger of two titans of steel industry. But, to me it was again a takeover by Mittal where he successful pushed out the incumbent management Guy Dolle and clan and took control of world number 2 steel maker. The Mittal with this takeover also gains better credibility in European market and by diluting his stake in the new holding to 45% from 80% in previous company, he answered the critics who have always considered him to run a family business and lack the transperacy in corporate governance. He further gained access to the value added products of Arcelor as his business involved low ended steel. Though it has been a master stroke by Mittal, it has come at the coast of high valuation for Arcelor. But, now the biggest stumble for him ahead is the successful integration of Mittal and Arcelor. Though, my belief is with the mettle and judiciousness of Mittal, it is just wait to time before we see an Indian being equated with Andrew Carnegie, the Steel Baron .