World's largest steelmaker Mittal Steel today launched a bid for rival Arcelor in France, Belgium and Luxembourg. Arcelor is a European consortium, while Mittal Steel is owned by the Indian-born Lakshmi Mittal. The bid, valued at 21 billion euros in cash and stock (27 billion dollars), one of the largest cross-border corporate acquisitions in history. If successful, the aggressive bid will make a mega steel conglomerate, spanning across all continents. The Mittal bid comes a day after American and European stock market regulators cleared the proposal. The Arcelor offer will be open for 30 business days, till June 29.

Said Mittal: "We continue to believe that our offer is a very attractive one, structured to enable Arcelor shareholders to participate in the exciting growth potential of the combined company, whilst also receiving a generous cash element."

The Mittal Steel bid for Arcelor has been mired in controversy from day one. The European governments, themselves stakeholders in Arcelor, have been threatening off and on that they will block the bid. However, their opposition may be of little value, if Arcelor shareholders decide that the bid is worth it, and tender their shares. Stock markets have given a thumbs-up to the acquisition proposal ever since the proposal was made public. This points to a wide base of support for the deal. Stock prices of both Mittal Steel and Arcelor
have risen considerably in the last four months.

The governments have pointed fingers at Mittal's corporate governance, saying Mittal Steel, which is majority-owned by Lakshmi Mittal and his family, is not the perfect mate for Arcelor. The governments have also accused Mittal of making low-quality steel in countries with poor labour laws and using such "ill-gotten" riches to raid Arcelor. Some of them have gone on record that the takeover will lead to job losses
in Arcelor.

Couched in diplomatic language, the message from many European capitals has been clear hostility to an Indian MNC taking over a true-blue European consortium. The governments have been mulling over introducing Mittal-specific legislation to block Lakshmi Mittal from taking the reins at Arcelor.

Currently world's third richest man, Lakshmi Mittal was born in a poor Marwari family in India. His family moved to Calcutta when he was in school. After his college education - he was a brilliant student- Mittal started assisting his father in his businesses. Mittal moved abroad, where he hit jackpot, through a combination of ingenuity, luck and circumstance. Lakshmi Mittal bought moribund steel plants at throwaway prices, turned them around with his managerial skills, and put them on the path of profit. Ever since, Lakshmi Mittal has been concentrating on growth through acquisitions. According to his own
admissions, it takes a long time to set up a greenfield steel plant and get it up and running. That way, Mittal would never be able to reach his goal of building the steel empire he wanted. Inorganic growth seemed to be a better option.

Mittal's acquisition-led growth has been largely in keeping in with the trend of consolidation in the steel industry. A capital-intensive industry like steel favours resources that are pooled together, while taking on the market. Mittal has assured that there will be no job losses in Arcelor, that Mittal Steel is a European MNC, and that corporate governance norms are at its finest in Mittal Steel.

Lakshmi Mittal is finding that reviving dead steel plants is a far easier job than changing deep-seated governmental attitudes to Asian acquirers. Last year, Chinese oil giant CNOOC had to drop its offer to
acquire US rival Unocal. At that time, the US politicians - mind you, not regulators or the shareholders - had raised objections, following which CNOOC had to pull out. Unocal went to Chevron for a lower price. Earlier this year, Dubai Ports had World to withdraw from acquiring P&O Ports in the US. In the Arcelor case, Mittal has been fortunate enough to get the clearances from American and European regulators to make his mega-bid. Now, he can keep his fingers crossed till June 29, when the final shareholder response to the deal will be out.