It could be billed as a clash between archaic economic nationalism and nerves of steel. In early, 2006, world's second largest steel conglomerate, Arcelor did not appear to take kindly the takeover bid by its rival Mittal Steel, disparagingly referred as a "company of Indians".
The offer was famously rejected with putdowns not typical of sophisticated European businessmen. Arcelor went on to advise its shareholders not to sell shares to Mittal because it did not "share the same strategic vision, business model and values". Later even the French, Luxembourg and Spanish governments joined the offensive. The French Finance Minister himself termed Mittal bid "ill-prepared and hostile", while expressing worry about some 28,000 Arcelor related French jobs.
This led to ruffling of feathers in India where the matter was seen as a slight to Indian-born London-based entrepreneur L. N. Mittal. So much so that Commerce Minister Kamal Nath had to give vent to public displeasure. He warned the French of a trade war if there was any bid to block the deal.
The bid was sought to be blocked in a variety of ways. Chief among them was the induction of a white knight in the form of the Russian steel company Severstal with a view to spurn Mittal's offers. But what really won in day was the manner in which Mittals handled the takeover talks.
Two Luxembourg ministers involved in extensive and mostly secret discussions with LN Mittal and his son Aditya later revealed that these talks "helped a lot in making the deal happen" finally. They underlined to Mittals the attachment most natives had for Arcelor as the steel industry was the source of wealth and everybody had somebody was associated with it. Mittals were later to decide to retain the headquarters of new merged entity in Luxembourg.
In June 2006 Arcelor bosses finally accepted a $34bn offer from Indian firm Mittal. Next month LN Mittal announced acquiring 50 per cent share in Arcelor and in the same month raised it to 92 per cent. The merged entity, to be christened Arcelor-Mittal, was to control 10 per cent of the world's steel making capacity. The news was received with a feeling of triumph across India with one media report describing it a "harbinger of things to come -- economic superstardom (for India)".
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