The Hindu Business Line : Hard-selling the steel deal

Mittal Steel's deal with Arcelor was not just sweet talk and the smell of money — a lot of hard work had gone into convince the men who matter that a Mittal-Arcelor tie-up would be much more productive than an Arcelor-Severstal deal, which the Arcelor CEO, Mr Guy Dolle, was pushing for. A colleague who visited Mittal Steel's Web site found that the company had marshalled enough arguments to convince Arcelor shareholders that the two were ideal partners with complementary geographical footprints. The gains that would accrue to Mittal Steel and Arcelor if the two got together are also listed out.

That's not all. Having established the positives of a Mittal-Arcelor tie up, the Web site trains its guns on the Russian steel company, Severstal, saying it was no match for Mittal, which is the world's Number One steel company, while Severstal was placed at lowly 15.

A point is made about Mittal's assets being superior to Severstal's and that Mittal was stronger even in Severstal's core market, Russia. Severstal gets a further drubbing with the Web site calling it a regional player compared to Mittal's global leadership; and saying that Severstal's non-Russian assets are sub-scale and uncompetitive and, finally, that Severstal has a record of poor corporate governance.

This last point has a familiar ring to it because in the initial stages of the takeover attempt, Mr Guy Dolle had said something similar about Mittal Steel's management practices. Talking down rivals seems to be a universal phenomenon.

Mittal-proof?

Lakshmi Mittal's success with Arcelor naturally gladdened Indian hearts, but there were some apprehensions when Mittal let it be known that India and China were his next targets. Reactions from Indian steel majors on a possible takeover attempt by the cash-rich Mittal varied from well-reasoned arguments against it to a naïve belief that the Government would rush in to protect the domestic companies.

Asked for his opinion, one steel sector executive told a colleague that he believed in the famous dialogue from the Hindi movie Deewar, where one brother scores over the other by saying "Mere paas ma hai": (mother is with me). "So if Mittal comes hunting, I will tell him "Mere paas Paswan hai," the executive said, with a wink.

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