Check with somebody who has played a role in a takeover or defended a takeover. The rush of adrenaline is incomparable. Men and women go into a huddle for days together: promoters, executives, financiers, investment bankers, legal experts, communication specialists and lobbyists. It is like an army camp in times of war. One in ten deals may reach its logical conclusion. If successful, there are rewards aplenty for all. Defeat can devastate. The drama is always intense. Seldom is the whole drama behind a deal captured. Most takeover battles are ring-fenced with confidentiality agreements. The true account seldom comes out. Let sleeping dogs lie, those who lose the battle are bound to tell you.
Mittal Steel, controlled by Indian billionaire Lakshmi Niwas Mittal, wanted to acquire Arcelor. The two had fought bitterly for assets all over the world. A merger between the two, Mittal argued, would solve this problem forever. Mittal Steel was the world’s largest steel producer; the merger would create a bigger conglomerate. This would save billions of dollars in raw material and administrative costs. There was many a hurdle. The Arcelor board and CEO Guy Dolle did not approve of the merger. Mittal Steel was controlled by Mittal, while Arcelor was widely held. So there was a clash of cultures. Also, they said, Arcelor produced steel of a higher quality than Mittal Steel. So it gained nothing from the merger.
Sill, Mittal pressed on. Arcelor had snatched Dofasco from under Thyssenkrupp’s nose. Mittal told the German steel-maker that he would sell Dofasco to it once it acquired Arcelor. This was to raise money for the buyout. There were bankers to be convinced and shareholders to be met. The sales pitch was that there would be huge synergies if the two merged.
Dolle started on the wrong foot. His derogatory remarks about Mittal Steel’s Indian brass in general and Aditya, Mittal’s son, in particular did not go down well with the company’s shareholders. Towards the end, Dolle even got Severstal of Russia in as a White Knight. But Mittal was able to checkmate him. Severstal, his spin doctors spread the story, was unlisted and therefore nobody knew its innards. Its closeness to Putin also caused alarm bells to ring. (After losing the fight, Severstal listed on the London Stock Exchange.) After some tough negotiations, Arcelor finally fell into Mittal’s lap.
The drama of the deal has been captured in great detail in Cold Steel (Little, Brown; 2008). Written by journalists Tim Bouquet and Byron Ousey, it traces the acquisition through all its ups and downs. The drama was played out in London, Paris and Luxembourg. Clearly, key people on both the sides spoke to the authors, though it is not certain who leaked the accounts of the confidential meetings. It was a complex deal because it was spread over many countries, and national pride was invoked as shareholders’ interest. But Mittal and his team made it happen. Of course, he had to compromise on his family’s hold over the merged company. But he got what he had set out to achieve.
More than one government got involved in the acquisition: Luxembourg, because it was a shareholder, and India, because Mittal was its global face. Though Mittal Steel was headquartered in London and listed on the Amsterdam Stock Exchange, Mittal was still an Indian citizen. There was an elaborate cat and mouse game played out in Delhi, which the sharp eye of the authors has not missed.
A good book is one which gives enough space for the characters to develop. The three principal characters in this book are Mittal, Aditya and Dolle. Mittal comes across as an optimist, a cheerful enthusiast who can get his men to walk the extra mile. Aditya is the classic backroom boy. He manages bankers and is the diplomat of the group. He carries out backroom negotiations to break the deadlock. Dolle, on his part, is a technocrat of the old school. Fact often makes better reading than fiction.
