Takeover battle
T.R. RAJAN
COLD STEEL — Lakshmi Mittal and the Multi-billion Dollar Battle for a Global Empire: Tim Bouquet, Byron Ousey; Little, Brown, an imprint of Little, Brown Book Group, 100 Victoria Embankment, London EC4Y 0DY. Rs. 650.
This is an eminently readable and absorbing account of the behind-the-scenes drama of the takeover battle waged by Lakshmi Niwas Mittal against the management of Arcelor in his bid to emerge as the “Emperor of Steel”, to borrow the title of a feature by Nelson D.Schwartz, senior writer of Fortune magazine.
The book is a “whodunit” and “howdunit” thriller with the dramatis personae drawn from many continents and occupying the highest positions in current and emerging superpowers, the biggest of investment banks, law firms and public relations outfits. After quickly tracing the rise of Mittal from a poor suburb of Kolkata to become the largest producer of steel, the book takes us to Mittal’s London residence.
Guy Dollé, the then CEO of Arcelor, came to meet Mittal after reluctantly accepting his invitation to discuss a possible collaboration arrangement. Dollé was stubbornly hostile, and loath to even recognise the presence of Mittal Junior, Aditya.
Later, when asked by the interviewer from Radio Station Europe1 about his reaction to Mittal’s offer to take over Arcelor, Dollé was peremptory and dripping with sarcastic contempt. He told him: “The answer is clearly no…There are two categories of steel. There is premium-quality steel and there is commodity steel. It’s like, there’s perfume, that Arcelor specialises in, and then there’s a sort of eau de cologne which is Mittal’s domain… a lot more technology and grey matter goes into each tonne we sell.” Then he went on to add “Part of Mittal’s offer consists, if you’ll excuse the expression, of monnaie de singe.” It literally means “monkey money”. It also means “funny money” or tainted money. These words were to come back to haunt him.
Ringside view
The authors, Tim Bouquet and Byron Ousey, both journalists, have had almost an outer ringside view of the events as well as access to people and record. It is indeed a human interest story featuring “six billionaires, many of the world’s top investment bankers (interestingly with two brothers, pitted against each other, one working for Goldman Sachs and the other for Morgan Stanley), presidents and prime ministers, secret meetings, accusations of skulduggery, culture clashes and allegations of racism.” The book has been written in an almost breathless, fast-paced style, evocative of the sleepless marathon at sprint speed run by the participants in the multi-billion drama.
The Mittals — the father-son duo — and Dollé come out of the arduous journey with no change in their stances — the Mittals with the prized target in their possession and Dollé with loss of his position and power. The political establishments of both Luxembourg and France which had initially thrown their weight against Mittal did not have much problem doing a 180-degree turnabout when arm-twisted by the powers that be in India and “friends” of Mittal in Europe. After the deal was done, it was even rumoured that Mittal was considered for a Legion d’Honneur by President Chirac; the same Chirac less than a few months earlier had sent a backdoor message to Mittal asking him not to attend a luncheon hosted by Prime Minister Manmohan Singh when he was visiting Delhi to avoid unpleasantness to himself!
Intrigue and lobbying
All except Dollé made money from the deal. Investment bankers on either side pocketed $ 200 million in fees. Mittal’s total bill for banking, legal, lobbying and P.R. services amounted to $188 million. Other billionaires also became richer and some of them were offered board positions in Arcelor Mittal.
If a reader is looking for a primer in evaluating opportunities or valuing companies or guidance on EBIDTA multiple for valuing steel companies — fodder for number crunchers — he will be disappointed. The book takes you beyond that to the real world of intrigue, lobbying, networking and moves and counter-moves which could be the envy of a chess Grandmaster. One also realises that the rollercoaster ride in mega-deal making is not for the fainthearted or a clock-watching manager (No deal is done till it is done!). The ultimate accolade to Lakshmi Mittal was paid by the investment bankers. Yel Zaoui of Goldman Sachs said “I have never before worked with a client where I knew a hundred percent of what they were thinking.” Spiro Youakim of the Citigroup had no hesitation in saying that if Mittal called him up for anything, he would be at his office in five minutes.
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