One way or another, it appeared Arcelor was
determined not to do the deal with Mittal Steel. And this morning, maybe it pulled out
the ace by announcing plans to merge with Russian steel company Severstal to create
the world’s biggest steel company. This leaves Mittal Steel jilted at the altar and
relegated to the position of the world’s number two in the sector.

When news of the potential buy-up of Arcelor by Mittal steel first broke, the boss
of the smaller company, Guy Dollé, said that Mittal’s offer was “prejudicial,
threatening and unbalanced.” But Mital Director Wilbur Ross retorted: “Dollé was in
effect saying of the steel company he managed, ‘It’s my playpen and I don’t want
anyone else to play with my toys – go away’.”

Later on in the saga, the Mittal plan was hit, when Arcelor announced a poisoned
pill. It appointed an independent three-person board for Dofasco, its Canadian steel
offshoot. Once the deal had gone through, Mittal had planned to sell the Dofasco
subsidiary off to partially fund the cash component of its bid. But by appointing an
independent board, Arcelor had effectively ring fenced the company, protecting it
from Mittal’s plans.

Now the company, which is determined to stay free of Mittal control – and, for
some reason, seems unwilling to let shareholders decide what’s in their best interests -
has announced the merger with Severstal. Existing Arcelor shareholders will have
66% of the new company, which will trade under the Arcelor name. Guy Dollé will
still be chief executive.

© Investment & Business News 2013