Interview: The steel industry
>> the results company will be known as mittal steel. earlier, erin burnett spoke with the two deal makers, lakshmi mittal, chairman and c.e.o. of ispat, and wilbur ross, chairman of international steel.
>> i have been propagating that the steel industry should be consolidated for the last many years and we started the process way back in 1994. we grew up as a smaller company, about five million tons and started looking at different opportunities for consolidation of the steel industry. this is our story. today what you see, l.n.m. group and ispat international, have business in more than 14 countries and one 50,000 employees, grouped together. what we have done, as you have said, ispat international acquired l.n.m., so this becomes second largeest steel group. and then we needed to look for further opportunities for growth, consolidation and globalization. today, we are the most global group in the world. we needed to look at opportunities in the u.s.a. we have a company called ispat inland in chicago, a smaller company. if you look at the steel industry in the u.s., there has been few consolidation, few mergers and acquisitions in the steel industry. i.s.g., under wilbur ross, has been the leader and pioneer in the company, acquiring five companies in the last 2 1/2 years and has become the largest steel company in the united states.
>> wilbur, why did you choose, when it deal came along, why did you choose do it now, the 40’s% premium nothing to be upset about, certainly, but why did you feel you needed to sell it to somebody overseas?
>> we’ve always had international in our name and always intended, as i’ve discussed with you before, to be international. so for us, the decision was to do individual deals, take five or 10 years, and hope to create something like what mr. mittal has already, or do one big transaction, make a global map right away. so he and i met august 24 for the first time although i had known of what he was doing and admired it and we got along very, very well.
>> so august 24 was the first you had conceived of it?
>> i had been admiring what wilbur has been doing in the u.s., as i’ve been sitting in london, and i really wanted to meet him and understand what is his vision and what he wants to do in the steel industry. and then we met, carry on, wilbur.
>> as it turns out―he’s my new boss, i have to do what he says.
>> you have to remember where your bread is buttered.
>> we found we both like the need for efficiency, the need for globalization, the need for investment quality capital structure, all the key things and we’re both entrepreneurial companies. many of the big steel companies are bureaucratic businesses and these were not so we felt there wouldn’t be a culture clash by putting them together and it’s gone very smoothly.
>> 40% in europe, 30% in the u.s. and 30% from south africa, kazakstan, algeria. asia is a big hold here. is that the next area of acquisition for you?
>> a couple of months back we announced a small acquisition in china. we decided to make a beginning. we have announced a small downstream project and we are constantly looking at opportunities to invest in china. as the largest global steel company we cannot be truly global without a footprint in china so we will lock at the opportunities in china. we will also look at opportunities in india, which is also coming out as a very strong growth market . these are the opportunities which we think we will look at in the future.
>> we’re very active in asia. i’ve been 48 times to asia in the last 10 years. so we’re comfortable with asia and very much agree with the strategy.
>> stay with us, michael ovitz expected to take the stand tomorrow in the trial in which investors are trying to recoup $140 million severance package he received eight years ago. off to delaware live with the latest on that trial coming up.
