Arcelor, Laxmi Mittal and Severstal
Interesting article in Yale Global by Jonathan Fenby, about Arcelor, the largest steel manufacturer in Europe, Laxmi Mittal, a global steel tycoon of Indian ethnicity and the Russian company, Severstal and the politics of steel in Europe. The latest news is that the Russian company got the deal.
Mittal’s latest take over target is Luxembourg-based steel Arcelor group, which is controlled by a network of French, Luxembourgeois and other interests, some government-owned. His bid aroused sharp opposition, including criticism of the way he runs his group, which he tightly controls. The hostility goes well beyond the desire of the Arcelor management to keep its independence. Though Mittal Steel is incorporated in the Netherlands and Mittal lives in one of London’s most expensive mansions, the bid has been widely represented as threatening the loss of a major European industrial undertaking to a global corporation with no national loyalties.
The author goes on to show, how Europe is hypocritical in its nationl protectionist strategy. On the one hand it does not want to change it's lifestyle of long vacations and a short work week, to being forced to work harder and be more productive under a different work ethic. On the other hand, Europe can take over other companies in other parts of the world, without qualms or hesitation.
In that context, the Mittal bid has come to represent everything feared by defenders of the “European model” of big state welfare and regulation. If Mittal controlled Arcelor, it is argued, a major European industrial group and its jobs would be at the mercy of an unaccountable management that might suddenly switch operations to Asia. The reaction follows a string of other examples of nationalist knee-jerking, including a deal cobbled together under the auspices of de Villepin that saved France’s big Suez public works group from being taken over by an Italian company by engineering a link-up with the state-owned gas provider. Similarly, Germany’s Siemens has been stopped from buying into France, while the government in Paris has drawn up a list of industries regarded as strategic, and therefore worthy of defense. The list includes casinos.
On the other hand, European companies have been highly active in snapping up firms across the globe. Renault runs Nissan in Japan, French firms buy up power and water treatment firms across the world; L'Oréal group of Paris snaps up Britain’s Body Shop. Rising worry about globalization hardly slows the acquisition drive of French firms.
Arcelor has finalized the deal with Russian Severstal, a company that has close ties with the Kremlin. Europe is keen on the deal with the Russians, since Russia is providing energy, that is important for their economies. Arcelor management described the head of Severstal as a “true European” as one of the reasons for partnership.
In a $16 billion deal announced in late May, the company will cede a third of its shares to a Russian company, Severstal, in return for acquiring the owner’s stake in a merger that would create the world’s biggest steel group. Mittal is not the only one put out at this turn of events. Severstal’s owner, who will eventually increase his stake to 40 percent, has close ties to the Kremlin, so fears have emerged that Areclor may find itself engulfed in the politicized world of Russian business.
update on the steel merger
Mittal Wins Arcelor Deal
June 25, 2006 7:44 a.m. EST
Som Patidar - All Headline News Staff Writer
Brussels, Belgium (AHN) - Mittal Steel Co. on Sunday won the historic Arcelor deal ending the five-month old takeover war to forge the world's largest steel firm.
As per the deal Laxmi Mittal will be the Co-Chairman with Joseph Kinsch and the new firm will be called Arcelor-Mittal, a news agency reported. The majority of new board members will be from Arcelor. Mittal will hold 45% stake whereas Arcelor SA will be 55% stakeholder in the firm, the report said.
Arcelor will have to pay a fine of 130 million euros to Russia's Severstal for breaching the deal. Early on in the day, the directors of European steel giant Arcelor met in Luxembourg to decide between the partnership offered by Russia`s Severstal and the hostile bid from Mittal Steel.
Mittal’s latest take over target is Luxembourg-based steel Arcelor group, which is controlled by a network of French, Luxembourgeois and other interests, some government-owned. His bid aroused sharp opposition, including criticism of the way he runs his group, which he tightly controls. The hostility goes well beyond the desire of the Arcelor management to keep its independence. Though Mittal Steel is incorporated in the Netherlands and Mittal lives in one of London’s most expensive mansions, the bid has been widely represented as threatening the loss of a major European industrial undertaking to a global corporation with no national loyalties.
The author goes on to show, how Europe is hypocritical in its nationl protectionist strategy. On the one hand it does not want to change it's lifestyle of long vacations and a short work week, to being forced to work harder and be more productive under a different work ethic. On the other hand, Europe can take over other companies in other parts of the world, without qualms or hesitation.
In that context, the Mittal bid has come to represent everything feared by defenders of the “European model” of big state welfare and regulation. If Mittal controlled Arcelor, it is argued, a major European industrial group and its jobs would be at the mercy of an unaccountable management that might suddenly switch operations to Asia. The reaction follows a string of other examples of nationalist knee-jerking, including a deal cobbled together under the auspices of de Villepin that saved France’s big Suez public works group from being taken over by an Italian company by engineering a link-up with the state-owned gas provider. Similarly, Germany’s Siemens has been stopped from buying into France, while the government in Paris has drawn up a list of industries regarded as strategic, and therefore worthy of defense. The list includes casinos.
On the other hand, European companies have been highly active in snapping up firms across the globe. Renault runs Nissan in Japan, French firms buy up power and water treatment firms across the world; L'Oréal group of Paris snaps up Britain’s Body Shop. Rising worry about globalization hardly slows the acquisition drive of French firms.
Arcelor has finalized the deal with Russian Severstal, a company that has close ties with the Kremlin. Europe is keen on the deal with the Russians, since Russia is providing energy, that is important for their economies. Arcelor management described the head of Severstal as a “true European” as one of the reasons for partnership.
In a $16 billion deal announced in late May, the company will cede a third of its shares to a Russian company, Severstal, in return for acquiring the owner’s stake in a merger that would create the world’s biggest steel group. Mittal is not the only one put out at this turn of events. Severstal’s owner, who will eventually increase his stake to 40 percent, has close ties to the Kremlin, so fears have emerged that Areclor may find itself engulfed in the politicized world of Russian business.
update on the steel merger
Mittal Wins Arcelor Deal
June 25, 2006 7:44 a.m. EST
Som Patidar - All Headline News Staff Writer
Brussels, Belgium (AHN) - Mittal Steel Co. on Sunday won the historic Arcelor deal ending the five-month old takeover war to forge the world's largest steel firm.
As per the deal Laxmi Mittal will be the Co-Chairman with Joseph Kinsch and the new firm will be called Arcelor-Mittal, a news agency reported. The majority of new board members will be from Arcelor. Mittal will hold 45% stake whereas Arcelor SA will be 55% stakeholder in the firm, the report said.
Arcelor will have to pay a fine of 130 million euros to Russia's Severstal for breaching the deal. Early on in the day, the directors of European steel giant Arcelor met in Luxembourg to decide between the partnership offered by Russia`s Severstal and the hostile bid from Mittal Steel.
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