novel Thinking

Mittals takeover
Friday, June 30, 2006

I was one of the happiest person to hear the news that Arcelor board has accepted the more sweetened offer from Mittal, one of our own. I always have a soft corner for him that he still holds an Indian passport, given the benefits he could have accrued just by acquiring an European one, which in his case should not be a big deal. I think, this single decision of him has prompted the Indian government to stand as a pillar behind him and most of all, the people of India to see this as a success by an Indian.

As the dust settles and specs of the deal emerges, it actually looks that Arcelor has taken over Mittal, rather than the other way round. Arcelor will have more board of directors in the combined company and the headquarters of the combined Arcelor-Mittal would be Luxembourg, rather than Amsterdam where Mittal steel was based. Further Lakshmi N.Mittal will will be the President and Joseph kinsch, current chairman of Arcelor would be the acting Chairman of the combined company thereby overshadowing Mittal. Further, Mittal would have less than 45 percent of the combined company. These points raises one important question in any thinking mind. Why did Mittal gave up so much to make this deal?

The answers are fairly clear as pointed out overtly by Business-week report and others. Arcelor bringing in Severstal as the white knight would definitely make things tougher for this Indian born billionaire's Mittal steel to maintain its influence and be competitive in the long run. Moreover, Mittal's meteoric rise in a short span of time could have made him a quick billionaire, but the world's largest steel maker does not have the strong foundation and the empire has the risk of tumbling as quick as it rose. But, by sealing this deal, Mittal could have got out of both these problems. He effectively ousted Severstal out of the game and made his company more stronger and "safer" by combining it with a company that has a long history and often sighted as the jewel of European industry. He also got out of a mess the fast rise of Mittal steel could have brought in the short or long run.

Even though he is relegated to the back seat of the combined company, I see this as a momentary setup. I believe he is going to rise like a phoenix very soon after the deal is 100 percent fixed. So, even though the particulars of the deal and the numbers show it as something that Lakshmi overpaid, but in the long run, Lakshmi has actually fixed up a much bigger problem that was in the anvil. This again stands testimony to this Indian's foresight and perseverance despite all odds. This is the stuff successful people are made of.

My wishes for more success to this man.

Posted byPraveen J at 12:21 PM 7 comments  

roses in ma garden
Saturday, June 24, 2006

Posted byPraveen J at 1:30 PM 1 comments