The Hindu Business Line : Takeover tales

‘Cold Steel’ by Tim Bouquet and Byron Ousey tells the inside story of the Arcelor-Lakshmi Mittal takeover battle. Written with pace as a thriller, the book, as the preface says, “is a tale of epic twists and strange turns featuring six billionaires, many of the world’s top investment bankers, hundreds of international lawyers, seven governments and their presidents and prime ministers, secret meetings at private airports, accusations of skullduggery ... it was a contest full of culture clashes and corporate espionage ...” Both the writers had a bird’s-eye view of the denouement; Bouquet had interviewed the Mittals for a profile in the Telegraph Magazine and Ousey was advising the Luxembourg government, which was the biggest shareholder in Arcelor, on its communications strategy. Excerpts reproduced here are from Chapter 22 of the book.

If President Jacques Chirac felt he had ridden out the storm over Mittal and staved off a further international diplomatic disaster with India by ordering the toxic ship, the Clemenceau, to turn round and return to France two days before his State vi sit, he was sadly ill advised. As the presidential jet carrying him, five ministers including Thierry Breton, and 32 business and industrial leaders neared Delhi’s Indira Gandhi International Airport, the patrician politician was focusing hard on how France and her sluggish economy could get a bigger slice of India’s economic boom. For every $1000 that India imported, France sold it just $18 worth, as the sub-continental superpower turned its attention away from Old Europe towards the New World.

He landed to the latest issue of the Tribune, an Indian daily published out of Chandigarh. It warned: ‘Aside from any fallout from the Clemenceau dispute, another possible sore spot is last month’s bid by Lakshmi N. Mittal to buy Arcelor SA.’ Indian business leaders were still calling France’s reaction to the bid xenophobic.

Lakshmi Mittal also happened to be in Delhi to attend the wedding of the son of his old friend Sant Singh Chatwal, the Sikh international hotel magnate based in New York and a major fundraiser for the Democrat Party. His son Vikram - also an hotelier, who had combined M&A work for Morgan Stanley with a modelling career - had like Aditya Mittal attended the Wharton School of Business. But there any similarity with Mittal’s home-loving boy, also in India with his wife Megha for the wedding, ended. Santi Chatwal was out to tame his hard-living, jet-setting, model-dating son, known in Manhattan as the Turban Cowboy; with a wedding that would outshine even the lavish nuptials of Yanisha Mittal.

Lakshmi Mittal had caused a near-media riot when he and Usha had arrived in Delhi on the evening of 18 February. Disappearing into a melee of journalists and cameramen, he refused to comment on Arcelor, merely telling them that he was taking a break from a series of ‘roadshows’ that were now under way, where he had been meeting Arcelor shareholders. This was a purely private visit, he said, although he did give a television interview, remarking, ‘I am sure that the Prime Minister Dr Manmohan Singh will take up this issue’ with President Chirac. Singh’s office, however, had said that the Prime Minister was unlikely to broach the subject with Chirac.

Any disappointment Mittal felt was short-lived. He was delighted when he then got a call from Prime Minister Singh, India’s first Sikh premier, asking if he would attend an official lunch he was giving for Chirac on Sunday 19 February. ‘l am delighted to accept, said Mittal, who had always enjoyed rubbing shoulders with major world figures like Tony Blair and Bill Clinton, with whom he had had a meeting the previous evening. Clinton was also a guest at the Chatwal wedding. Mittal was keen to share his thoughts with political leaders, and Singh, the man he always referred to as ‘my prime minister’, was no exception. He also took notice of what they said, sometimes dramatically.

Three years before, at a meeting in the Indian capital, Singh’s predecessor Atal Bihari Vajpayee had asked him: ‘Mr Mittal, where do you live when you are in India?’

‘I live in the hotel,’ said Mittal, who, although he had no steel interests in India, often visited the country as a board member of ICICI, and the country’s second-largest lender, with 24 million customers.

‘Mr Mittal, it is not right that a man of your standing should be living in the hotel,’ the Prime Minister implored him. ‘You must have a house here.’

Cold Steel: Lakshmi Mittal and the multi-billion dollar battle for a global empire by Tim Bouquet and Byron Ousey; Hardback; 340 pages; Little, Brown UK £20 / Hachette India Rs 650 Excerpted with permission from Hachette India

As soon as the meeting was over, Mittal had rushed to call his wife. ‘Usha, we must buy some land and build a house.’ Usha swept into action, spending a reported $7.5 million on an old colonial bungalow at 22 Aurangzeb Road, the Capital’s most exclusive street, occupied by embassies and millionaires, and rebuilt it as a house. Singh’s lunch could also give Mittal the chance to meet another world leader and maybe persuade Jacques Chirac that his bid for Arcelor posed no threat to anybody`s job, that no plants would be closed. Before setting off from his new house, Mittal went through the all-familiar arguments in his mind, the synergies, the industrial logic . . . His thoughts were suddenly interrupted. His phone was ringing. The voice on the other end of the line was not Indian.

‘Mr Mittal,’ the high-ranking French government official said, ‘we request that you do not attend the lunch today.’ Mittal demanded that he explain himself. The ‘request’ had come from the very top, he was told. Chirac did not want to meet him. His presence there would be considered ‘unfortunate’.

Mittal was in a dilemma. He could either risk upsetting his Prime Minister by not attending the lunch or he could turn up and cause a diplomatic rumpus with the French, whom, in spite of governmental intransigence, he still believed he could woo to his bid for Arcelor. He put business before political patronage, and chose the latter.

That evening he was at a drinks reception when he saw the 74-year-old Manmohan Singh making a beeline for him. ‘You did not come for the lunch,’ the Prime Minister said. Mittal apologised profusely and hinted at the French phone call. Ever the stealth diplomat, he also saw an opportunity. ‘I would like to meet you officially sometime tomorrow and explain everything,’ he said. He had his wish. The PM would see him just before his official bilateral talks with Chirac at Hyderabad House, the palace built by Edwin Lutyens in 1926 and now used by the government of India for banquets and meetings with visiting foreign dignitaries.

Mittal was there promptly. He met Singh for just a few minutes but it gave him the chance to present his case for taking over Arcelor, to brief the Prime Minister on his meeting with Thierry Breton, and to explain that his non-attendance at the lunch was just the latest episode in the French governments hostile reaction to his bid. Singh agreed that he would indeed raise the issues with Chirac. At the beginning of their meeting Mittal had thought that at least if he could not get to Chirac directly to discuss his bid, this was the next best thing. Now when he shook hands with Singh and prepared to leave he had changed his mind. Having a prime minister do it for you was an even better thing.

He called London and updated Nicola Davidson. Within minutes her communications hounds were hunting down the Delhi press corps just to make sure that Chirac suffered maximum payback for Mittal’s cancelled lunch.

On Monday 20 February, a beaming President Chirac sat beside Prime Minister Singh in front of the world’s press. After signing nine agreements including one on defence co-operation and issuing a declaration on ‘the development of nuclear energy for peaceful purposes’, the two leaders opened up for questions on their ‘landmark’ meeting. But the journalists already had another script.

‘On the Arcelor case and your reaction to that,’ the first questioner asked, ‘Isn’t there something of a contradiction between your willingness to develop commercial relations with us and your reservations about this takeover? The President’s smile disappeared quicker than the Clemenceau steaming back to Toulon on full throttle. ’I would not put it quite in these terms,’ Chirac replied haughtily. ‘First of all, the company which is willing to take over Arcelor is not an Indian company. It is a Dutch company.’

‘But it is owned and operated by a person of Indian origin?’ came the follow-up.

‘Certainly, but the problem has nothing to do with L.N. Mittal. It is a Dutch company and Arcelor is a Luxembourg company. It has nothing to do with France and India.’

Still the questions came.

‘But what does your government think of the bid?

‘The French authorities are concerned about the shareholders and the company. Again, there is room for debate on questions like differences in corporate cultures between Arcelor and Mittal, or the conditions of the bid.’

‘If shareholders’ interests were better understood, would you not have any objection to the bid?’

Chirac raised himself up. He was irritated. He had been well and truly mugged. It might have been possible to avoid having lunch with Lakshmi Mittal but his influence was at work everywhere. `Again, the French government is a stakeholder, not a shareholder,’ he said. ‘Given the circumstances of the case, it would appear that it is not in the best interest of the company: It is up to the two companies involved to agree on the terms. It has got nothing to do with India.’

Any triumph Chirac had been expecting had just vanished. He looked across at Singh to help him out. There was nothing doing. Another journalist stepped up to the platform.

‘Mr President, will your government take direct or indirect action to ensure it doesn’t succeed?

‘I repeat, we haven’t initiated any action against any company, or even against any procedure,’ Chirac insisted via his interpreter. ‘We are facing a situation where one major group has launched a hostile bid against another one, contrary to all normal practice, without us having the slightest knowledge of the reasons for it or the programme proposed. We’re waiting, which is normal, to find out about the plans from the Mittal company and when we know what they are, we’ll form an opinion, in accordance with the traditions and laws and independence of the economic sector.’ Finally, Prime Minister Singh came to his rescue, directing journalists now to ask some questions about their talks, but not before adding. ‘I have held discussions with President Chirac on Mr Mittal`s bid and I hope for a fair decision.’

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