by Jerome a Paris
Mon May 29th, 2006 at 06:45:15 AM EST
Mittal, the steel group founded, run and owned by the eponymous Indain billionaire, has formally launched its takeover of Arcelor, the European steel group. Arcelor has now announced its parade, in the form of a merger with Severstal, the largest Russian company in the sector, giving Mr Mordachov, the main owner of that company, 32% of the merged entity.
When Mittal first announced its bid earlier this year, there were hints of racism in the mostly hostile European reactions to the bid, which were skillfully played up by Mittal himself. There was also a lot of support for the industrial logic of the deal, as well as a surprisingly positive reaction from the trade unions, some of which clearly saw Mittal as a decent owner, and Arcelor as a faithful follower of global capitalist rules.
Now that Arcelor's proposed riposte opens the perspective that Europe's biggest steel owner will be de facto (if not, contractually, for the first 5 years) controlled by a Russian billionaire, this begs the question of which foreign billionaire appears more acceptable to the Europeans.
The answer, is actually not that simple. A number of hostile reactions have come up to criticize the deal with Severstal, on the argument that Mordachov hardly represents progress in terms of transparency and corporate governance, and that he will be more clearly associated with his country than Mr Mittal (and that country, like others, but more than India, has a history of using economic levers in its international relations).
On the other hand, both Messrs Mittal and Mordashov are "real" industrialists who have built good companies in a tough sector and seem keen to continue on that road - so neither is in for a quick buck. and Arcelor's defense against Mittal at times seems more like a desperate attempt, targetted purely at financial investors, to keep the existing management in place.
Could the lesson here be that while our companies outdo themselves to please the financial markets, the real industrialists (i.e. the people most likely to actually to build factories and create jobs other than financial analysts or burger flippers) are to be found in the emerging economies and we should welcome them with open arms?
As Michelin mourns the death of its eponymous boss (and owner) Edouard Michelin and reminds us that some of Europe's biggest industrial groups are still firmly family-owned and managed - and seem to be thriving, could the debate turn to industrial vs financial investors rather than to brown vs white investors?