Mittal will pay 40.37 euros for each Arcelor share. The new company will be named Arcelor-Mittal and headquartered in Luxembourg. With more than 100 million tons of annual capacity, annual revenue of approximately $70 billon, and 320,000 employees, the combined group will become by far the largest steel producer in the world. Looking back, one could say that the confrontation between Mittal and Arcelor was almost inevitable sooner or later.

1999 was a bad year for the steel industry. Saddled with high fixed costs, falling prices and overproduction, a number of steel makers were forced to file for bankruptcy. Soon after the birth of Arcelor as a result of a merger of three large European steel producers Aceralia (Spain), Usinor (France), and Arbed (Luxembourg) in 2002, it became clear to the steel producers that the days of small or medium-sized steel producing companies were over, and that in future the steel industry would be dominated by a few giant companies.

Rotterdam-based Mittal Steel is largely owned and run by an Indian-born tycoon of Marwari origin, Lakshmi Mittal. He is a man who has become famous for his long-term vision of the steel industry and audacious moves. Realising that the rapid industrialisation of emerging nations like India would create unprecedented demand for steel in future, he went on a shopping spree. He bought plants in Romania, South Africa, and the Czech Republic.

In most of these acquisitions, Mittal was guided by a common formula: Buy sick plants with underperforming assets and low labour costs and then turn them around by introducing modern management techniques and reducing other overhead costs. In order to obtain greater efficiency in production, the company also acquired nearby coal and iron ore mines.

In recognition of Lakshmi Mittal's audacity and success in consolidating the steel industry on a global basis, Fortune magazine named him the European Businessman of the Year in 2004. In 2005, the company capped its string of acquisitions by purchasing the International Steel Group, a prestigious US steel company which was itself the result of a merger between Bethlehem and LTV. As a result of this aggressive acquisition policy, today Mittal Steel spans five continents and is the world's largest steel producer in terms of output. It owns plants in 18 countries.

But Lakshmi Mittal was still not satisfied. He knew that Mittal produced low quality steel and despite having wide geographic reach including America did not have a strong presence in the EU. In order to obtain better economies of scale and greater pricing power and to be able to moderate production in times of difficulty and compete with China, which is rising as a steel superpower, he started coveting Arcelor, which was not only Mittal Steel's biggest competitor in the world market but also produced better quality steel and had a strong presence in the EU.

Actually Arcelor is the world's largest steel producer in terms of turnover and the second largest in terms of output. The company operates in 60 countries, has got 94,000 employees and is managed by Mr. Guy Dollé, who has always displayed a chauvinistic attitude by looking down upon Mittal as being a "company of Indians" and not having "European values." He dismissed Mittal's takeover bid by saying that he did not want his shareholders to be paid with Mr. Mittal's "monkey money." He also cast doubt on the corporate governance practices of Mittal Steel.

But as the takeover drama unfolded, it became clear that Arcelor's managers, instead of protecting the interests of the shareholders, were fighting for their own interests. Some of the measures taken by the Arcelor management to fight the Mittal bid generated growing concern among shareholders and analysts about Arcelor management's corporate governance.

The way Arcelor management concocted a deal with the Russian tycoon Mordashov and tried to push it through came under heavy criticism. Until the last minute, the management tried to avoid putting the deal to a meaningful investor vote. Actually it was intense shareholder activism which finally forced the Arcelor management to drop its plans to hold an unconventional vote on the Mordashov deal and accept the Mittal offer.

Gone are the days when the management of large corporations could manipulate the shareholders into accepting its decisions without being questioned on the details. After all, the shareholders are the owners of the company and the managers are their servants. The successful conclusion of the deal also proves that at the end of the day, the best price will prevail, even if it is paid with "monkey money."

The writer is a columnist of The Daily Star.