Flashback: Lakshmi Checkmates TK
Lakshmi Mittal visited Alabama last month to take over the assets he maneuvered ThyssenKrupp AG into building.
In our May 2007 issue of Business Alabama, we detailed how Lakshmi Mittal, chairman and CEO of Mittal Steel and third richest man in the world at the time — a native of India who had recently moved into new digs next door to Buckingham Palace — outmaneuvered German steel giant ThyssenKrupp AG.
In the dealings, ThyssenKrupp’s loss was our gain, because Mittal’s victory pressured the German company to build a $5 billion steel complex in Alabama.
In boom times 2005, ThyssenKrupp had first hoped to expand its North American market with the hostile takeover of a prized Canadian steel company, Dofasco Inc. But the Canadians fled into the arms of a competing bid by Luxembourg-based Arcelor Group.
The following year, Mittal rocked the world’s steel industry by launching a hostile takeover of Arcelor. European Union countries were appalled by the coup — a ragtag bunch of former Soviet-block and Central Asian mills taking over the world’s largest steel company.
In overcoming EU anti-trust objections, Mittal first won over the Germans by promising it would sell the Dofasco assets to ThyssenKrupp.
But hostilities between Mittal and Arcelor evolved, over five months, into an amicable merger. While Mittal publicly said he would stick to the promise to sell Dofasco to ThyssenKrupp, the partners took measures to make sure that it wouldn’t happen. A special type of protectionist trust, “stichting,” blocked the sale in a Dutch court.
Mittal said his hands were tied.
The U.S. Department of Justice agreed, dropping an antitrust condition requiring divestiture of Dofasco. It didn’t hurt that the merger partners paid $360,000 to Ashcroft Group — the firm of former Attorney General John Ashcroft — to represent them before the DOJ.
The Dofasco deal checkmated, ThyssenKrupp pursued North American expansion by building a plant in Alabama, a $5 billion, two-mill complex — one mill making carbon steel and the other stainless. The carbon plant was completed in 2010, in the depths of the recession, and two years later, ThyssenKrupp put the plant up for sale. After 18 months of bid shopping it, a winning bid was announced for the carbon plant — $1.55 billion, by Arcelor-Mittal and a Japanese joint venture partner Nippon Steel & Sumitomo Metal Corp.
That’s what brought Lakshmi Mittal full circle to Alabama last month, to claim the assets he had maneuvered ThyssenKrupp into building.
Chris McFadyen is the editorial director of Business Alabama.