He’s like Evil Mr. Rogers

Trying to stave off an acquisition by the world’s third-richest man, French steelmaker Arcelor has decided to sell to a Russian steel baron. The CEO decided that Russians are preferable to Indians:

Mittal Steel, an empire spanning five continents, was a “company of Indians,” Mr. Dollé said at the time, and a “group of less-than-average” businesses that would pay for Arcelor “in monkey money” — a common French colloquial expression that means that something is worthless. European steel, Mr. Dollé added, was like “perfume,” and Mittal’s steel like “eau de cologne…”

Mr. Mordashov [head of the white knight, Severstal] can speak German and has seats on European boards, Mr. Kinsch said. “He’s a true European,” Mr. Kinsch said. [Link]

‘He’s a true European.’ Unlike Lakshmi Mittal, a UK citizen who speaks English but happens to be brown.

Is Arcelor CEO Guy Dollé is intrinsically racist? I’m betting this is strictly business. But repeatedly stooping to racist posturing to sway his shareholders? Absolute scum. You stave off hostile bids with fiscal strength, not ancient racism.

I hope Mittal Steel pistol-whips Arcelor in the marketplace.

Update: Via Sepia Mutiny, the extent of the hypocrisy becomes clear. Arcelor management claimed their main sticking point was that Mittal Steel is governed opaquely. And then they resort to trickery like this:

Yet to block the Russian transaction, the board has decreed that more than a half of the company’s entire share capital needs to vote against. Since typically rather less than 80 per cent of the capital is voted in such circumstances, opponents would have to win perhaps as much as 75 per cent of the vote to block the transaction. [Link]

In fact, in terms of the stated objectives of Arcelor management, the Severstal merger is a bad deal:

The merger is a complete nonsense as it hands effective control over to Mordashov by diluting the value of the shares held by Arcelor’s stockholders and puts a lower price tag on the company than the terms being offered by Mittal.

Nor does Arcelor/Severstal tick as many boxes: it will produce about 50 million tonnes less steel than a merger with Mittal - which is ludicrous, as this is an industry where everyone agrees scale is of critical importance. And tying with the Russians would deprive Arcelor of the chance to tap into Mittal’s sizable operations in the booming markets of China and India. Arcelor’s shareholders should turn up in force at the emergency shareholder meeting next month and boot this contemptible plan into the long grass. [Link]

The real reason for the resistance becomes clear: Arcelor management wants to keep their jobs at shareholders’ expense, and they’re willing to appeal to base racism to do it.

The primary difference between the two is that with Severstal, the Arcelor board remains in the driving seat, whereas with Mr Mittal, they’d be history. [Link]

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