Should Shareholders Be Kings?

The story takes place in France, in Belgium, and in Luxemburg. But it is really a pan-European story, and in economic terms it encompasses the entire world. Mittal, the biggest steelmaker in the world, has successfully gained control of Arcelor, the second biggest, through what initially was a hostile takeover bid.

This is no mere corporate takeover; it is a conflict between business and social models. Arcelor, originally French and Luxemburguese but now predominantly Belgian, has a strong base in Brazil and operates throughout much of the world. It specializes in high-quality, special steel products designed for the most complicated uses. These high-quality products are purchased on middle- and long-term contracts, mainly by long-time customers. Arcelor, one of the oldest steel manufacturers in the world, depends very little on the highly speculative world market for raw steel, and its workforce is (on average) highly qualified and stable.

Mittal, by contrast, is a conglomerate that has come out of nowhere to become the world’s leading steel company in a mere two decades. It did so by brilliantly consolidating and rationalizing steel plants throughout the world. Its president is Indian, but it has no factory in India. Mittal is mainly based in Eastern Europe, but also has a strong presence in Asia (South Korea) and Latin America.

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