Mittal Steel’s bold £12.8 billion bid for Arcelor, its nearest rival in the global steel business, has met with some condescending nonsense about incompatible corporate strategies and “social values” from Arcelor’s rattled board, and with even sillier comments from France’s supposedly business-savvy Finance Minister, Thierry Breton.
The genesis of the two steel giants could, admittedly, hardly be more dissimilar. Lakshmi Mittal has worked from near the ground upwards, turning a modest family business into the world’s biggest steel conglomerate through a rapid succession of shrewd acquisitions of faltering, investment-starved, steelmakers. Arcelor is a top-down construction, created by mer-ging and restructuring a clutch of formerly state-owned French, Spanish and other European steelmakers. Of course their management styles differ. But both companies are aggressive players in the consolidation of the global steel industry, equally intent on building market share. If Mr Mittal caught Arcelor’s managers half-asleep, as would appear, the true explanation may simply be that a hostile takeover bid from an Indian, even one whose life is as much associated with London as with India, never struck them as plausible.
The French Government has made no bones about being shocked — by the bidder as much as by the bid. M Breton rather gave the game away yesterday. Having hinted heavily that Mr Mittal should first have sought Arcelor’s hand in marriage, even though France has no state holding in the company, the minister headed into a meeting with Mr Mittal saying that he would tell him to “look carefully” at last year’s abortive bid by CNOOC, the state-backed Chinese oil company, to secure ownership of the US-based oil corporation Unocal.
The response to that bid was full of noxious nationalism and very light on logic. Mr Mittal’s bid, one of the most tangible signs yet that globalisation works in all directions at once, should be judged not on the nationality of the bidder but on the worth of the bid, which to some investors may seem to offer too little cash. It should certainly not be influenced by out-of-date prejudices. India is no longer the permit-ridden economic laggard that, for many decades, it was. The country is growing at rates that are already not far off those of China, despite attracting a mere tenth of the foreign investment. It has learnt to play to its strengths — a large pool of English-speaking talent, nurtured in the sympathetic environment of free speech and the rule of law in an open society.
On all these counts, China lags, an increasingly serious matter in a world where skills are valued more highly than capital. China can provide workers by the tens of millions, yet good managers are like gold dust. China can order up miles of motorway; but India has innovative, risk-taking mindsets like Mr Mittal’s. Already some Indian businesses have “brand recognition” that China can only envy. The more India prospers, the more evident will be the cost to China of being a closed, Google-censoring society.