It was on January 27 this year, Lakshmi Mittal, CEO of Mittal Steel, announced a hostile bid for his main competitor and the world's second-largest steel company, the Luxembourg-based Arcelor. Just three days earlier, Arcelor had grabbed Canadian steel maker Dofasco in a hostile bid. (See: ThyssenKrupp backs out, Arcelor wins Dofasco)

The idea of a bid reportedly came from Aditya Mittal, Lakshmi Mittal's 30-year old son and CFO of Mittal Steel. If true, this would be the right stuff for legends when the younger Mittal emerges from his father's shadow in future.

Lakshmi Mittal argued that consolidation would be vital in the steel industry to regain pricing power and protect the industry from cyclical swings. A Mittal-Arcelor merger would see a steel giant that would control around 10 per cent of global capacity and nearly 13 per cent of current output. It would be the first ever steel company with a capacity of 100-million tonnes per annum and would be thrice the size of its nearest competitor. The combined entity would have a wide presence across geographies and product segments.

Initial reaction of Arcelor's management was of disbelief. Arcelor CEO Guy Dolle, was extremely hostile and acerbic with a hint of racist prejudice. Guy Doll called Mittal Steel "a company run by Indians" having a "monoculture management", while Arcelor was run according to "European cultural values".

Mittal Steel was characterised as a family run company with the father-son duo of Lakshmi Mittal and Aditya Mittal running the show. Arcelor produces 'perfume' while Mittal Steel turns out 'eau de cologne', Guy Dolle said referring to Arcelor's focus on superior quality high-margin products. He indirectly boasted that Arcelor had a superior management and strategic vision.

European politicians went in to hectic confabulations on how best to block the hostile bid and keep the predator at bay. French foreign minister Thierry Breton, reacted to the news of Mittal's bid by touring European capitals to drum up support against the proposed acquisition, referring it as an act of "economic patriotism". (See: EU Competition Commissioner attempts to calm hostility to L N Mittal's Arcelor bid)

This invited an equally strong, if unnecessary, response from the Indian government. Commerce minister Kamal Nath even went to the extent of writing a formal letter to the European Union Trade Commissioner, indirectly urging the EU to stop resisting cross border transactions and let market forces decide the outcome of such deals..(See: Kamal Nath's intervention nudges EU on Mittal)

Even French president Jacques Chirac, on his India visit, defended official French opposition to the Mittal bid, saying the concerns being expressed were 'entirely legitimate'.

As days progressed, European politicians toned down their opposition, at least in public, as they were seen as backing the same inward looking policies which has severely affected the competitiveness of European companies. But Arcelor management maintained its hostile posture, though in less acerbic language.

In early June, Arcelor's management played what it thought would be a trump card - a white knight in the form of Russian steel tycoon Alexei Mordashov. It was announced that Arcelor would merge with Russian steel company Severstal, which is majority owned by Mordasov

In its desperation to block Mittal at any cost, the Arcelor management pushed the Severstal deal a bit too hard. To ensure success, it tried to cut down the choices before minority shareholders by changing the voting requirements to approve the deal.

But it had not bargained for the angry reaction from some of the influential shareholders including hedge funds, wealthy individuals and minority shareholder groups. (See: Arcelor investors favour Mittal but want more). The Arcelor management was accused of trying to hand over the company to Mordashov, just to protect "their positions for another five years".

As opposition grew, Arcelor was forced capitulate; it had to cancel a crucial board meeting to decide on its controversial share buy back scheme. (See: and Arcelor proposes share buyback to fend-off Mittal Steel's take-over bid)

These events made Mittal Steel more confident and Arcelor was forced to initiate discussions on the Mittal offer. Alexei Mordashov sensed the momentum slipping away and improved his own offer.

Finally, after nearly two weeks of formal talks, a formal agreement was thrashed out between Arcelor and Mittal. The agreement was made possible only after Mittal agreed to almost all the demands on valuation, strategic vision and corporate governance raised by Arcelor.  The agreement was approved by the Arcelor board which unanimously recommended the merger with Mittal Steel to shareholders.

But, the drama may still not be over. Alexei Mordashov would not give up without a protest and extracting the maximum for himself. Severstal maintains that its deal with Arcelor is binding and cannot be cancelled without getting an opportunity to discuss further improvements to the offer.

In response, Arcelor says Severstal has already improved its offer once and hence need not be given another chance. Besides, Arcelor is committed to pay a severance fee of €130 million to Severstal. But, Severstal may still initiate legal proceedings against Arcelor.