published on 10/07/08
The steel industry has come a long way in 20 years. In the late ‘80s, when Lakshmi Mittal was starting to expand beyond his original base in Indonesia, most of the global steel industry lay in state hands. In 1989, he signed a contract to manage an ailing steel plant in Trinidad that the local government saw as a liability. The contract stipulated that he could buy the plant if he made a success of it. He bought in Indian managers, slashed costs and raised output.
Mittal and the industry at large embarked on a spending spree. The culmination (so far) of the consolidation process in steelmaking was the takeover in 2006 of Arcelor by Mittal Steel. These firms were the number one and number two in the world by volume of output. Today, the combined Arcelor/Mittal is nearly three and a half times larger than its nearest rival. It’s the world’s first 100-million-tonne steelmaker and first to be worth more than $50bn.
Tim Bouquet and Bryon Ousey have written an account of the takeover in the style of a thriller. Cold Steel describes the often brutal and chaotic five-month battle between Mittal and Arcelor. The combatants are described as though starring in a fictional work of industrial espionage.
Arcelor’s management, according to the book, had feared a hostile approach from Mittal before the bid was launched in January 2006. Yet it came as a surprise to the steel industry. No-one thought the Mittals (Lakshmi and his son Aditya) had the money for such a move – and they didn’t. The bid came in an awkward mixture of cash and Mittal shares, who’s illiquidity raised doubts about the bid’s value.
The book’s main fault is that it is clearly written with the support of the Mittals. Nicola Davidson, head of communications at Mittal Steel and now Arcelor/Mittal, receives the authors’ most fulsome acknowledgment. So some elements of the account should be treated with care. The Mittals are portrayed as victims of a leak, but they may have fanned rumours of their bid to have an excuse to launch it.
Read the full article at Management Today