This Guy tried every trick in the book, but lost the game

Arcelor hung up its boot, in the end, but not before putting up a spirited fight over the five-month long affair. And the CEO of the fifth largest Steel group, Guy Dolle, and chairman Joseph Kinsch, used the entire range of Kautiliyan tricks — Sam, Dan, Dand, Bhed — to the hilt to stop the Mittal juggernaut.

At the onset of Mittal’s bid, it was a verbal attack that Mr Dolle resorted to, comparing Mittal Steel’s product, as ‘plebian Eau de Cologne’, while comparing his company’s produce as ‘Aristocratic perfume’, and even going to the extent of warning his shareholders to stay away from Mittal’s ‘Monkey Money’.

The Arcelor chief executive played it hard, and worked at everything from seeking refuge in by-laws, to interpreting company law to cater to his interests, to creating irritants to Mittal’s larger plan to even engineering a merger with Russian SeverStal, to thwart this deal. At first, he started strengthening his defences by creating other roadblocks.

Among them was transferring the ownership of Dofasco, a Canadian Steel company which Arcelor acquired to strategic Steel Stitching, a newly formed Dutch Foundation, so that Mittal would get into trouble with US’s tough Anti Trust Authority. Mittal’s plan was to sell the unit to ThyssenKrupp, but Arcelor executives heading Stitching will make the transfer difficult because of certain powers they have of holding a sale for five years.

Then Mr Dolle upped the ante on the shareholder front, by announcing a dividend of 54%, and also doling a carrot for shareholders by launching a special e5 bn payment to shareholders, if Mr Mittal dropped his bid or failed to gather enough shares on his bid. Thus matching the Mittal bid in terms of monetary gains and attractiveness for the shareholders.

In the meanwhile, the feisty chief executive didn’t hold any horses, while drumming up support against the deal, even if it meant going on a massive public relations offensive, and launching a multi pronged attack on the deal by evoking nationalistic feelings in Spain, France, and Luxemborough, and generating support from political establishments.

Throughout the five-month period, he drove home the point time-and-again to the shareholders, that Mittal’s Steel corporate governance was unfair to the smaller shareholders, as the family has three people — Mr Mittal himself, daughter Vanisha, and son Aditya — on the board, and controls nearly 87% of the firm’s shares. In the end, his company sent tomes of information, and reports on the benefits of the Arcelor-SeverStal merger to investment bankers, and shareholders.

Interestingly, corporate governance is one area that Arcelor was an exemplary example of, but the embattled Mr Dolle just put all corporate governance rulings on the shelf in his fight to save Arcelor from Mittal’s clutches.

So when he was pushing the Arcelor-SeverStal deal in the last two months, and one third of Arcelor’s shareholders, who were becoming increasingly irritated with the company ignoring them time-and-again as they wanted to have a straightforward vote on the future of the company, Mr Dolle refused, citing some bylaws, saying that they do not have to ask for shareholders opinion on SeverStal.

Last month, he even went on to say that merger can be stopped only if 50% of the entire shareholders base voted against it, knowing fully well that only one third of shareholders manage to attend the meetings. But alas, in the end, it appears that Kautilya favoured Mittal and the steel king showed his mettle in the end, and forged the deal.