Steel firms should consolidate after Mittal-Arcelor deal
NEW DELHI, July 1: Lakshmi Mittal, whose steel company has struck a $32.5-billion deal to acquire European steelmaker Arcelor, says other firms in the industry should also consolidate.
On Friday, a vote by Arcelor shareholders against a proposed alliance with Russian group Severstal cleared the way for the company's merger with Mittal Steel, the world's biggest steel company.
Mittal said the deal between the two biggest steel companies should lead to further consolidation in the industry.
It is very important that other companies should also start looking at consolidation, Mittal, an Indian passport holder, told private NDTV network in an interview broadcast here Saturday.
“They should start thinking what should be the business model for them,” he said after Arcelor shareholders voted in Luxembourg where the European company is based.
“I am sure ... there are a lot of boards of directors of various steel companies who are debating what should be the future of their individual companies and this paves the path for the steel industry to follow.”The Mittal-Arcelor deal is set to create a group with 320,000 employees producing about 116.0 million tonnes of steel a year or about 10 percent of the world market.
Mittal Steel is a privately owned company registered in the Netherlands but controlled by the London-based Mittal family. Arcelor is composed of former national steel interests from France, Luxembourg and Spain and also has activities in Belgium.
Mittal's hostile bid for Arcelor, announced in January, was met with strong opposition by the company's management, which announced a prosposed alliance with Severstal in May as a defensive move.
Mittal, 56, said the vote against Severstal was a victory for shareholders.
When Arcelor announced an agreement with Severstal, shareholders never liked it because they could never understand the logic and rationale of merging or having an agreement with Severstal.It was a very opaque transaction and they got on their feet.”Mittal said there would be no conflict of interest with Arcelor after the alliance.
They are strong in Europe and we are strong in America. They are strong in Latin America and we are strong in Africa.Both of us have business in China and we have a very small percentage in China so people can see that there is not much of overlapping and there will be a lot of synergies between the two companies.
He said all joint ventures and worldwide alliances between Arcelor and various firms would continue and both companies were interested in expanding in China and India.
Mittal said opposition by Arcelor management and some politicians in France and Luxembourg to the deal was just an “emotional outburst” and that the acquisition would inspire more Indian businesses to go global. —AFP
