Steels - Steal or Deal?

This head on collision between the largest & the 2nd largest steel makers has been in news for like what, 4-5 months? So much of hype & too many things happening around this! And I guess, I'm hazy on one point - How does a hostile takeover bid work and who'll win at the end? I mean, isn't this something basic - If the owners, Arcelor - Board of Directors & Shareholders don't want to sell it, how can someone else, Lakshmi Mittal of Mittal Industries acquire?

Well, in this story there are quite a bit of characters involved – Mittal, Arcelor, Dofasco, ThyssenKrupp, European Countries, India, European Commission, US Regulators, Netherlands based Trust firm & Lawyers. I guess, I'll be able to relate all of them here!

This plot started when Arcelor bought over Canada's Dofasco to gain some market in US's Auto-Steel. At this juncture like around end of January 06, Mittal made the offer to buy over Arcelor itself (which will make Mittal 3 times larger than its next steel competitor!). So, my thought was that Mittal wants to use Dofasco. But, as part of the buying deal, Mittal also announced that it'll hand over Dofasco to ThyssenKrupp (Germany's largest Steel Maker!). So, what is the advantage of buying Arcelor for Mittal? To become a sole leader - monopoly?

What did I say, monopoly? That’s it! You know how the reaction is going to be. As expected, Governments & politicians broke loose. The European ministers & politicians took a cold outlook to his bid. Well, if one third party makes noise, then we sure can see many more parties trying to involve themselves into and try to benefit out of it. Once it turned out that the Europeans are not backing the deal, someone from outside needs to back Mittal! Who else is better than our best known Indian politicians? So, they termed Europe’s perspective towards the bid as racial, with Lakshmi Mittal being an Indian. All we need to do is give Indian politicians some chance and they can pull out any logical reasoning out of air! But, sure they added enough spice to this deal - Considering how Indians will survive in the future in this International Business World; If an Indian needs help, they are not going to sit & watch; They’ll back him/her with the best they got!

Arcelor is trying to make the deal look a bit tough and is taking all defensive measures. One of its main concern is that Mittal is not correctly valuing Arcelor! It never appreciated the offer of 22.4Billion Euro. And now, it takes another route in its defense strategy by buying back more of its shares like for around 8Billion Euros.

BTW, this is just not involving only two parties. It’s a huge-old industry & we are talking about the leaders trying to become as dictators for the world. So, enters the European Commission & US Regulators, who needs to give the nod for this deal to continue. I guess, both of them are ready to approve the bid under one constraint – Dofasco shouldn’t be part of Mittal after the takeover. I guess US has already approved it with the same constraint!

“The US Department of Justice today appeared to give Mittal some leverage over such a poison pill-style defense, saying: "If Mittal acquires Arcelor but is unable to divest Dofasco, the agreement requires Mittal to divest certain alternative assets to a buyer acceptable to the department."
- TimesOnLine.

And the EU is taking its time till the first week of June 06.

Arcelor has to make sure the bid doesn't work out! So, when trying to take care of themselves, they also made sure Dofasco becomes a far reach for Mittal. So, it ends up handing over Dofasco to some Netherlands based Trust firm (Not sure of the exact details!).

Meanwhile, Mittal is also doing all the backend works getting help from all possible corners! They are making sure no stone is left unturned. With the help of lawyers, they are trying out the legal ways to get hold of Dofasco from Arcelor if at all the bid didn't go as expected. Is there a way for this? I mean the owners don't want to give up one of their subsidiary but Mittal want to take it from them legally!?

Adding to all these, there is this patent lawsuit going on in US where Arcelor has sued Mittal.

The Arcelor patent covers its Usibor technology, which uses boron, a soft nonmetallic element that strengthens steel in cars to help them survive crashes. Arcelor says Chicago-based Mittal Steel USA is violating the patent by selling aluminum-coated boron steel that is highly resistant to corrosion.
--Bloomberg.com.

I’m not sure if this has some implications on the take over bid or if this is just another US Patent Lawsuit!

Put on with so many plots, my first question still stands! How does a hostile takeover bid work? Who approves this?

Much of the article's credit goes to Bloomberg.com! I'm just here @ a corner of the world reading different news articles, trying to understand where the "steal" deal is going & putting my views ahead! Sure, why not! Consider this as a disclaimer :) Also, I would greatly appreciate your comments if you feel there are more to this or if I’m wrong somewhere!