Mittal: No more Mr Clark Kent
Lakshmi Mittal is a man who won't be cowed down by the rhetoric hurled at him. He has Arcelor in his sightindia Updated: Feb 19, 2006 15:13 IST
If you don't count Zorro (of the mask'n'sword fame), Lakshmi Niwas Mittal, with his attempts to take over Arcelor SA, is right up there in the list of daring heroes flashing a lot of steel. Mittal, a first generation entrepreneur who has made his name and fortune out of a single product business, is cocking a snook at nations across le continent and signalling a major row between India and the European Union.
And in the middle of all the controversies his decision to take over the world's second largest steel company has spawned, the man remains supremely confident. He told the media almost with a nonchalant shrug on Wednesday that he would acquire Arcelor and claimed to have received support from the Luxembourg government and a major shareholder in Arcelor to clinch the deal for a cool $ 22.7 billion. Mittal Steel, while refusing to up the offer, said that the company was confident that the existing offer was the best for shareholders of Arcelor and Mittal Steel. Once the deal is inked, the Netherlands-based Mittal Steel will become the world's first 100 million-ton plus steel producer.
Mittal, who symbolises the entrepreneurial acumen of a new generation of Indians, has dared to ruffle feathers across Europe by making the $ 22.7 billion hostile bid for a EU corporate giant. As wires burn between India and Luxembourg — with threats of protracted negotiations going haywire — Mittal's accession as the steel tsar shows that the world may have every reason to fear the new age Indian biz wiz. He also underlines the fact that outsourcing is not the only reason why India is on the world radar.
The response of European industry and politicians reveals hostility towards a man who has them stumped. They haven't even refrained from turning jingoistic about the whole affair in an effort to outline their opposition to the take-over bid, which, under 'normal' circumstances, should have been a commercial decision or a dispute between two contending parties. 'Cultural differences' is as colourful a euphemism as they come, and this expression was used to shoo Mittal away. Even the nature of share-holding of Mittal Steel, where the Mittal family holds nearly 97 per cent of the stake in the world's largest steel maker, is cited as reason to oppose the take-over.
WTO Chief Pascal Lamy, who in his incarnation as European Union Trade Commissioner, would often lash out at developing countries for their stand on liberalisation, has now suddenly turned a new leaf. To justify 'protectionism' in the context of Mittal's bid, Lamy now contends, "There is a 'foreign' side to Mittal [Steel]. Its governance and its capital are family-based, which is not the case with Arcelor."
But then, are Europeans new to family-based companies? The Western media seems to be obsessed about family-run businesses. A peep into the history of Europe will reveal that Europe is used to having family-controlled and family-influenced companies that have been very successful.
"In public opinion, the Mittal bid for Arcelor is also a materialisation of emerging economies such as India's. The question of economic models is thus also a factor," Lamy said. "Mittal is seen by the public as an Indian company" even if "this company is run from Europe".
The Indian government, in the meantime, has taken up cudgels on behalf of Mittal, an Indian passport holder. Commerce Minister Kamal Nath argued that attempts to thwart the acquisition violated WTO rules. In a terse letter to European Trade Commissioner Peter Mandelson, Nath asserted that the "reaction in some quarters of the European Union impinges on the letter and spirit of the National Treatment principle... You may like to ensure that our negotiations are not adversely affected by possible actions of European Union members which may be contrary to this basic principle."
Pressed by India, the EU agreed to take up the issue of Mittal's takeover bid. "EU Trade Commissioner Peter Mandelson spoke to me yesterday [Wednesday] after my letter to him on the issue and he [Mandelson] said he will take up the issue with the European Commission," Nath stated.
A bigger picture beyond WTO rules highlighted by Mittal is worth consideration. "The strength of our performance in current market conditions illustrates the increased stability that industry consolidation has delivered. This same logic lies at the heart of our proposed strategic merger with Arcelor. The steel industry needs strong, value creating, growing companies with global reach, which this combination would deliver," he said. His claims were supported by analysts like Michel Tappeiner, of WestLB, who pointed that an increased consolidation is very positive for steel pricing levels because the sector will probably have more production discipline and better pricing.
The markets seem to be favourable too; obviously they see a merit in it. Incidentally, shares of the two companies have gone up since the bid was announced last month.
He might not be masked and may not wield a rapier. But Mittal is a determined man. The crowds, meanwhile, cheer him on and shout 'Ole!' Make that 'Oye!'