His Arcelor deal has a lesson for Indian businesses. Much against many odds, Lakshmi Mittal, who bid for Arcelor, did it: Clinched a landmark deal. Its a landmark deal not because he has to pay more than what he originally contemplated, but because it is unique in itself in many ways.
The
Mittal Arcelor deal would simply mean creation of a giant
company in the global steel market that can claim a market
share of above 11% which is three times higher than its nearest
rival. Obviously, it gives the merged entity enough scale
and momentum to penetrate into new markets such as China where
international players have had an insignificant role till
date. The merged entity, being a big purchaser of inputs such
as iron ore, coal, and other steel making requirements, enjoys
enough strength to bargain for a best-fit price. Another good
thing to happen is that it would not really create a dominant
position for the merged entity in the global steel market,
except in the context of regional/national markets, if any.
The net result: "price stabilization" in the global
market.
This
merger has indeed paved the way for "globalization"
to take roots in an otherwise conservative European Union
which has for reasons best known to it, guarding its assets
being taken over by outsiders for quite sometime. Secondly,
this deal made the corporate-world to take note: it's not
the boards, but the shareholders who decide what is good for
their company. Thirdly, to woo the shareholders, the acquirer
must shell-down the right price. The otherwise passive shareholders
of Europe have set a precedent that when it comes to their
welfare, they won't mind in asserting their will on the managements,
even aggressively, if required. It has established the fact
that a business deal must be handled as "business"
and no amount of "economic patriotism" can prevail
over a "business proposition" irrespective of the
personalities involved. |
