Once Again, Russia Snubbed by World
The Financial Times reports that Russia's bid to corner the steel industry has met with spectacular and predictable failure, with Russians once again blaming their own shortcomings on the "russophobia" of the West, just as they did when their pairs skaters met disaster at the Salt Lake City Olympics and just as they do any time failure rears its head, in lieu of introspection and reform:
The heads of Arcelor and Mittal on Monday put five months of acrimony behind them as they shook hands on a €26.9bn (£18.5bn) deal that will establish the world's largest steelmaker and provide a fee bonanza for their advisers.
Goldman Sachs, Citigroup, Credit Suisse, Société Générale and HSBC will share more than $100m (£55m, €80m) in fees.
A €10.8bn loan to finance Mittal's cash element of the deal – one of the biggest raised in Europe in recent years – could provide as much a fifth of the total M&A fees generated so far this year, according to Thomson Financial Freeman.
But the outbreak of peace between the two warring companies produced aggrieved noises from Russian politicians over the perceived slight to a white knight offer for Arcelor from Severstal.
The agreed alliancewas unveiled in Arcelor's sumptuous Luxembourg headquarters after its board backed an improved Mittal offer for the steelmaker. Mittal's bid was 44 per cent higher than its initial hostile offer in January, although the effective value slipped yesterday as Mittal shares fell by 4 per cent.
The combined entity – Arcelor Mittal – will be based in Luxembourg and produce three times as much steel as its top competitor.
But the tie-up is not a fait accompli. Arcelor investors will vote on Friday on a planned alliance with Severstal of Russia, originally engineered in an effort to thwart the Mittal bid. Russian politicians reacted angrily to the Arcelor board's rejection of a merger with Severstal, Russia's leading steel producer, suggesting it was politically motivated and showed a bias against Russian companies.
Victor Khristenko, minister for energy and industry, called Arcelor's rejection of Severstal an example of "double standards" and "Russophobia".
Mr Khristenko added: "I am completely dissatisfied with this decision and regard it as a bad sign. As soon as the Russian economy strengthened and became open, we began to encounter certain attitudes."
Another difficulty is Dofasco, the Canadian steel group bought by Arcelor last year. Arcelor says Dofasco should be kept, but Mittal has pledged to sell it to ThyssenKrupp of Germany for $4.6bn.
Guy Dollé, the combative Arcelor chief executive who led the campaign against Mittal, was offered an executive role but will not remain in the long term.Aditya Mittal, chief financial officer of Mittal, said: "We have agreed to disagree. It is now up to the Arcelor board of directors to decide on the future of Dofasco."Guy Dollé, the combative Arcelor chief executive who spearheaded the campaign against Mittal, was offered an executive role in the new-look company, but will not remain in his role long-term. Aditya Mittal has ruled himself out as Mr Dollé's successor.The combined company will be based in Luxembourg. Mr Kinsch will remain as non-executive chairman, to be succeded by Lakshmi Mittal when the Arcelor boss's contract expires
14 comments:
let's do some EU bashing too--they did show quite a lot of Hinduphobia before they accepted Mittal's bid. This time Russians are of course paranoid about Russophobia as they usually are--but that doesn't make the EU leaders any less elitist or--at times--even racist...
EVGENY: it's a valid point, but the main question is whether Russians can understand the obstacles they face and adjust to them so as to overcome them, or whether pride will continue to goeth before a fall. Even if Europe's concern about Chechnya were irrational, for example, if Russians' only response to it is to say "you have no right to be concerned" then Russians will never get anywhere.
As well, your point highlights the absurdly ridiculous Russian notion that it can somehow lead a coaltion of Europeans against the United States; in fact, the U.S. is far more likely to be an ally of Russia than Europe, yet Russia only displays hatred for the United States.
This blog like the Acelor fiasco are examples of irrational fear of Russians, Ukrainians and Bellorusians (Russophobia).
Ph.D.
Yet more irrationality indeed. Severstal is one of the largest steel producers in the world, but it is evidently a sign of Russia's terminal decline etc. Evgeny's insightful remark, however, gets co-opted by the eccentric writer of this blog as confirmation of her own foolish prejudices.
ANONYMOUS: Yes, of course, all Russian failures are due to conspiracies among those who hate Russia. And all American failures are due to flaws in the American character. And one day Russia will be great.
I'd laugh out loud if it weren't so very sad and pathetic.
REITH: Try to read the post before you comment. If you can't even do that, you're not worthy of notice. This post is about Russia being shunned by the world, it doesn't say ONE SINGLE WORD about the viability of Russia's steel industry.
But if you insist on discussing an irrelevant topic because you know La Russophobe is right about the topic at hand, in the manner of a classic propagandist, then try at least to recognize basic facts. Russia has one or two industries that are significant, but it still has a national average wage of $300 per month and a declining population because the vast majorit of its industries are on the verge of extinction. The ones that are significant are corrupt and dominated by an incompetent political regime. Russia has always had certain industries of significance, and it has always been in decline. You can't see the forest for the trees, as usual.
"This post is about Russia being shunned by the world, it doesn't say ONE SINGLE WORD about the viability of Russia's steel industry."
You do understand that a company is not the same thing as a country? Has anybody told you that? Severstal is a successful and growing company, as are many in Russia, which has relatively recently emerged (because you don't appear to know this) from a wholly state-controlled economy. There are certain difficulties inherent to such transitions. Ah, but no, it's all about the evil Russians and their design on the world. Why don't you grow up and stop bleating about things you don't understand.
Whether Severstal is "successful" or "growing" has NOTHING to do with this post. There is NOTHING in it that questions such an assertion. You are engaging in totally absurd propaganda attempting to focus on some other topic, because you know that the actual topic is one you can't handle.
Cigarettes are also a sucessfully and growing industry in Russia. Strange as it may seem, La Russophobe is not impressed by that fact. I guess you are.
Whether Severstal is "successful" or "growing" has NOTHING to do with this post. There is NOTHING in it that questions such an assertion. You are engaging in totally absurd propaganda attempting to focus on some other topic, because you know that the actual topic is one you can't handle.
Cigarettes are also a sucessfully and growing industry in Russia. Strange as it may seem, La Russophobe is not impressed by that fact. I guess you are.
This is a straight business story, still in course by way. Severstal problems are not a reflection upon their country and could not be interpreted as such by anyone but a bigot like you. As for your bizzare remarks about cigarettes, it's rich for you to talk about irrelevance when you bring in such a pointless factor.
It's a story which says that the world rejected Russia's attempt to move into international commerce because the world doesn't trust Russia, for a list of reasons so long and varied it takes the breath away.
Let me disagree once again: the world didn't reject Russia's attempt to move into international commerce. Arcelor's board did (and let me point out--it was the board, not even the shareholders--they will get a chance to do that on June 30th). I doubt Arcelor's board is any representative of the world-. Secondly, if Arcelor's board really acted upon prejudice about Russia's business rather than the viability and the attractiveness of the offer that Severstal made to Arcerol, well, there is something bad about this board--and I would be much more concerned about corporate governance in Europe than anything Russia-related.
I'll be more pragmatic here: Arcelor's board preferred Mittal's bid because, among other things, he offered a higher price than Severstal did...Please notice that it was not a question when both companies offered the same price for Arcelor and the latter chose the Indians over Russians. No, it was quite opposite: Arcelor was first happy with Severstal's proposal until Mittal offered a better price. Where's any hint of anti-Russian feelings here? It is pure business--and that's what anybody on Arcelor's board should have done--if they were really serious about keeping their jobs there.
So at this point, I really lost the argument La Russophobe was making. I do agree that Russians often Russophobia where it sn't, but I think the case with Mittal and Hinduphobia did prove that there is some racism in EU's attitude towards foreign business. If anybody is interested in my further thoughts on the issue, please see my article about Mittal and EU at http://www.tcsdaily.com/article.aspx?id=062906F
Evgeniy, welcome to the blog! A good article, thank you.
Just as a warning, admin of LR have a tendency to exagerate everything and make false arguments and statements about Russia. For example, in their veiw, the Severstal unsuccessful bid is a humiliation of every Russian from the president and CEO of Severstal to a postman in Prostakvasheno:-)
"I really lost the argument La Russophobe was making"
Yes, many arguments are thrown at bloggers simply to have some kind of senseless opposition to everything non-negative said about Russia.
The name Russophobe speaks for itself.
Please read other comments and aticles published here to see the scope of things and determine for youself whether admins of LR have any credibility or not.
Enjoy!
Indeed, Evgeny, you have stepped into a nest of vipers here. You can be sure your informed and intelligent observations will be wasted here.
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