Eau de Cologne vs Perfume

06 February 2006 |

So Lakshmi Mittal should pare his plans according to his ethnicity?

Priya Ramani

Priya Ramani When Lakshmi Niwas Mittal announced his 18.6 billion euro bid for King Kong-sized steel producer Arcelor last month, it apparently surprised even his dad Mohan. So it’s understandable that the French were a little taken aback.

But that still doesn’t excuse their hostile response. Arcelor’s Chief Executive Guy Dolle described the hostile bid as a ‘‘bit ridiculous’’, adding that European steel was like ‘‘perfume’’ and Mittal’s steel like ‘‘eau de cologne.’’ Ittar would have been a more accurate comparison, but then Dolle is clearly not a global citizen.

The French company’s board of directors said the offer spelt doom for its shareholders. In fact, Arcelor’s share price shot up by more than 30 per cent as markets took a call that the mega deal would go through despite the noisy opposition. Why, even the otherwise stagnant stock price of Germany’s second biggest steel-maker Salzgitter AG has been on the rise since the bid announcement. After all, mergers and acquisitions are muscle builders in any stock market, irrespective of who’s doing the buying. Analysts see the latest Mittal announcement as a signal of an exciting period of consolidation in the European steel industry.

The firm said any hostile takeover by the soft-spoken Mittal would also hurt its employees, the country and the memory of Louis XIV (Okay, I made that last one up but I’m sure you haven’t forgotten that Mittal’s daughter was married in his palace in 2004).

Unhappy French Finance Minister Thierry Breton went a step further. He said he wasn’t sure whether corporate governance systems and cultures of the world’s two biggest steel companies were even compatible (Translation: The French will certainly not say namaste or allow samosas in their canteen). Another ridiculous thing he said was that the bid lacked vision—now a Rajasthan-born tycoon who started out in a village without electricity, yet managed to reach a point where he could pick the 17th century Palace of Versailles as a wedding venue for his daughter and who believes he can create the world’s first 100 million-tonne plus steel producer may lack subtlety and taste, but he’s certainly not low on vision.

In fact, the same Breton who’s protesting about Mittal’s future plans for Arcelor was once a die-hard believer in aggressive cost cutting. That’s exactly how he rescued the French government-run Thomson Multimedia in the 1990s. Before he took over the company in 1997, the French even considered selling the ailing electronics firm to South Korea’s Daewoo for one franc.

Back in those days, Breton swore by concepts like reinvention. But now the dynamic, curly-haired man — who moved from CEO of French Telecom to finance minister — has a completely different opinion. He recently expressed ‘‘profound concern’’ that the hostile bid was launched without any preliminary discussion between the two parties. Not that Arcelor hasn’t been aware of Mittal’s intentions — Dolle himself claimed his company had been preparing to do battle with the Indian-born tycoon for almost a year. So on and so forth and more such racist hogwash.

Sunil Prasad, the secretary-general of the Brussels-based Europe India Chamber of Commerce (EICC), explained it slightly more diplomatically. ‘‘The hostile reaction of French and other European Union politicians against Mittal’s bid shows the economic immaturity of Europeans in the age of merger and acquisition as a part of the globalisation process,” he told a news agency.

But he’s being too polite.

Look at us. Are we making a fuss because multinationals, including Swiss biggie Holcim and French giant Lafarge, now control nearly a quarter of India’s cement production? I haven’t heard anyone around me complain about the smell of French cement.

This is the age of the global bidder and, whether the French like it or not, the New Tycoon doesn’t necessarily eat croissants for breakfast.

Indian companies are increasingly looking at global opportunities. We still have only one Mittal — after all, he’s the world’s third richest man after Bill Gates and Warren Buffet (my personal favourite) — but, on a smaller scale, there’s been a lot of recent action.

Indian companies have increasingly realised the cost benefits of going global—Videocon bought Thomson SA’s colour picture tube business in China, Poland and Mexico, Matrix Labs picked up Belgium’s DocPharma, Videsh Sanchar Nigam Limited acquired Teleglobe International Holdings (in fact, the Tata group was on a roll in 2005 with overseas deals totalling more than $650 million), Reliance Infocomm bought Flag Telecom, ONGC bought Texas-based Exxon Mobil’s 30 per cent share in some Brazilian oil fields... the list is longer than in any previous year.

Perhaps the French Flinch stems from that favourite European paranoia—outsourcing. The fear that Indians are answering all the phone calls of the developed world. After all, as Arcelor declared, even Japan was a better partner than India.

Of course, we’re as exclusionist as anyone. We go on tours that promise dal-chawal in Bulgaria, insist on carrying pickle (in leaky bottles) that immigration officers can smell a mile away and love building white marble temples in every global neighbourhood we inhabit. We have our own XL mix of racial and colonial hang-ups. No wonder the French are worried that the Mittals of India could change the way they live and work.

But that’s not the point. The French (or the Indians) can no longer get away with their stereotypical impressions of the way they think businesses should be run and their narrow images of who should be boss. These days, you never know which country the next CEO is coming from. And in a time like this, why on earth should a Lakshmi Mittal — whose European hub is spread across at least a dozen countries — have to prove that his steel smells as fragrant as the stuff they make in France?



URL: http://www.indianexpress.com/full_story.php?content_id=87336

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