COLD STEEL
Lakshmi Mittal And The Multi-Billion-Dollar Battle For A Global Empire
By Tim Bouquet & Byron Ousey
Hardback 340 pages. Published by Little Brown. Rs. 650/-
How Eau de Cologne Overwhelms Perfume
The 4th richest man in the world, circa 2008, with $45 billion to his name, has a clear cut understanding of the forest and the trees, as well he might! Here’s some key Laxmi Mittal speak: “It is the shareholders who own a company. Management are merely stewards.”
It is faith in this principle, and the application of a trailer-truckload of money, that enables Laxmi Mittal to do battle with a thicket of governments, bankers, legal teams, White Knights, company boards and partisan opinion leaders; and win. The story of this epic Battle for Arcelor, in 2006, that costs Mittal $188 million-- about a million dollars a day, in fees alone, funding a dragoon of bankers, lawyers, lobbyists and communicators of his own; is the subject of this fascinating and thrills-a-minute-book.
That is, if one’s idea of excitement is true-life corporate merger and acquisition (M&A). It is, let’s face it, the only conquest-for-real game left in town. Today, if one wants a real swashbuckling sword fight, the only place to go is the movies, to watch Johnny Depp in the theme-parkish The Pirates of the Caribbean series.
The authors of Cold Steel however, have definitely managed to capture the spirit of the chase. It is written as a tightly edited page-turner, bristling with thrust and parry, by a duo of British journalist Tim Bouquet, something of a Mittal family insider, and Financial PR Professional Byron Ousey.
Target company Arcelor’s CEO, Guy Dolle, provides most of the colour in this story. He smirks that you need to take a bus to go to the bathroom at Mittal’s Kensington Palace Gardens house. He resists all friendly attempts to merge the biggest, in steel jargon “long” products company, Mittal Steel, with the most profitable “flats” company aka Arcelor, while simultaneously spouting the need for “consolidation” in the Steel Business at every Steel Industry seminar he attends. The thing is, Dolle wants to consolidate other bits and pieces of the steel industry around the world into the venerable Arcelor, and retire as Chairman of the Board of the biggest steel company in the world. He does not enjoy a predatory Mittal putting a spoke in his wheel--not when he’s already negotiated his succession plan.
So Guy Dolle plays the tragi-comic protagonist instead. With all the hauteur of an elderly French Engineer wedded to concepts of “economic patriotism” and other such “Old Europe” nuggets; he decides to join the fight. He names names and casts slurs and dourly tugs on his trade union style moustache. He disparagingly likens Mittal Steel to “Eau de Cologne” and Arcelor to “Perfume” and stirs an additional hornets’ nest of Eau manufacturers looking out for Dolle. He casts aspersions on Mittal Steel’s corporate governance standards, implying it is a pere et fils operation. He calls it a “company of Indians”. He compares Mittal Steel’s publicly traded share scrips, running at prices comparable to Arcelor’s, to Monopoly-style “funny money”.
But ironically, as the pressure mounts, Dolle’s search for a White Knight settles on SeverStal of Russia, owned by maverick steel-man Alexey Mordashov, an acolyte of President Putin. Dolle nearly pulls it off but the dam finally breaks in Laxmi Mittal’s favour. Of course, the vastly increased bid of Euro 40.40 per Arcelor share; upped from his opening gambit of only Euro 28.21 has something to do with it. It leaves SeverStal scrambling to find more money while the shareholders reject the Russian suitor in Mittal’s favour. Maybe Laxmi Mittal’s other principle, which good breeding and Marwari discretion prevents him from airing publicly, is: It’s all about the money honey!
The Mittal family acquires a controlling stake of 43% in the combined entity of ArcelorMittal and creates corporate history; and not just as an Indian passport holder. Laxmi Mittal also takes a giant step forward towards his “Andrew Carnegie” style ambition of producing 200 million tonnes of steel a year. His prize, ArcelorMittal, is not only the world’s largest steel company but produces over 120 million tonnes of steel a year, about 10% of the world total.
Since this great milestone achievement, we have, of course, seen Tata Steel acquire Corus of the UK, with similar attendant drama, catapulting itself to a ranking of Number 5 in the world. But this is in the new liberalised India, with bulging foreign exchange reserves, where domestic corporations are being encouraged to go global.
But, as Laxmi Mittal says, had he not moved out abroad in 1977, to set up his first mini-steel mill in Surabaya, Malaysia, to produce a modest 26,000 tonnes of steel, much of what followed may not have been possible. Also, as the Arcelor shareholders and management eventually acknowledge, Mittal Steel was, in fact, a European company. Mittal Steel was listed and incorporated under European laws and in conformity with European standards of corporate governance. And, while Commerce Minister Kamal Nath and Prime Minister Manmohan Singh did weigh in on behalf of Mittal; the fact is, even without the backing of a resurgent India, the prospects, the possibilities and the expectations for the global Indian are indeed looking very good.
(850 words)
Gautam Mukherjee
Thursday 12th June 2008
Appeared on the BOOKS page of The Sunday Pioneer and online www.dailypioneer.com on 29th June 2008, as "The man of steel".
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