London, June 26: Guy Dolle, Arcelor’s chief executive who bitterly opposed his company’s merger with Mittal Steel, is to step down, it was announced today.
It was over dinner at his palatial home in London in January that Lakshmi Mittal first broached the idea of a take-over. Dolle didn’t like the idea.
He will go down in the history of the industry as calling Mittal Steel “cologne” to Arcelor “perfume”.
Now, the whiff of defeat is in the air and Dolle will go as soon as the merger is completed.
There are formalities to be gone through, first, and a formal bid made and an all-important vote by Arcelor shareholders on June 30 before Mittal can say Arcelor is his.
Also, the Russian steel company, Severstal, which had hoped to take a stake in Arcelor, warned today that it may take legal action for alleged breach of contract.
“We have a legal, binding merger agreement that the board of Arcelor entered into,” the group said in a statement. “(Arcelor) has unanimously supported it to date, consistently affirming the industrial logic, the better business sense and the higher value creation behind our agreement on several occasions. We are now reviewing all of our options.”
Today, however, like the emperor Ashoka surveying the slain on the field of battle after his great victory, Mittal flew to the headquarters of Arcelor in Luxembourg to hold a joint press conference with his former adversaries.
One quality that has counted in his favour over the last five months is that, even under provocation from the other side, he has remained restrained in his language, merely continuing to argue that a merger was in the best interests of the steel industry.
Last night it was nearly midnight before Mittal issued his victory message.
“I am delighted that Mittal Steel and Arcelor have agreed to merge,” he said. “This is one of the greatest days in the history of Mittal Steel and a seminal event in the steel industry that will shape its future.”
He then applied a little Boroline on the enemy’s wound: “Arcelor is an exceptional company with world-class assets and highly regarded management. I want to take this opportunity to express my gratitude to all of our employees, shareholders, and business partners for their support throughout this process of creating the best steel company in the world.”
He added: “This combination is a natural alliance that represents a transformational change towards realising our vision of a more sustainable and stable industry benefiting all stakeholders. It is a winning combination between our two complementary companies, creating the industry leader that will create significant value for our shareholders.”
In Luxembourg, Mittal told a news conference that the combined group would not only be a leader in steel, spearheading a global consolidation in the resurgent sector, but also one of the world’s top companies, ranked at number 40 in the Fortune 500.
The engagement is not even a day old but Arcelor chairman Joseph Kinsch, who will retain his post in the new entity, is already talking like an Indian.
He described the relationship as a “marriage of reason”, but he hoped it could turn into a marriage of love.
The conversation then threatened to turn into sickly Bollywood dialogue.
“We have been trying to persuade the bride for the last five months that we love her and she should accept our marriage proposal,” Mittal quipped.
The crown prince, Mittal’s son, Aditya, who is chief financial officer of Mittal Steel, said he expected the deal to close by mid-July. He said he would be on the management board but would not become chief executive, which will be nominated by Arcelor.
According to the Mittal side, “shareholders of Arcelor will receive 13 Mittal Steel shares and 150.60 euros in cash for 12 Arcelor shares. Based on the Mittal Steel share closing price on the NYSE on June 23, the revised offer values each Arcelor share at 40.40 euros. This is an improvement of 2.66 euros, or 7 per cent over the previous offer announced on May 19, 2006.”
The statement said: “It remains critical for shareholders of Arcelor to vote their shares at the June 30 meeting against the proposed Severstal combination.”
It also said: “Upon the retirement of Mr Kinsch, Mr Mittal will assume the role of chairman and the successor to the presidency will be proposed by Mr Kinsch.”
Meanwhile, Spain’s biggest trade union, UGT, has welcomed the takeover, reversing its earlier opposition.
“UGT’s metal and construction workers, in an initial assessment, consider the merger deal positive,” UGT said in a statement. “According to information provided by Arcelor, it seems to meet the conditions put forward by this union.”
Arcelor employs around 17,000 workers in Spain, mostly in the north of the country.
But France’s CFDT labour union said it expected Arcelor staff who own shares in their company to vote for Severstal.
“We are not in favour of Mittal,” said CFDT official Dominique Plumion.