TAKEOVER BATTLES:In one corner was Lakshmi Niwas Mittal, then the fourth-richest man on the planet. In the other was 63-year-old Guy Dollé, chief executive of Arcelor.

FOR NEARLY six months of 2006, it was a takeover battle that was so compellingly vicious and unpredictable that it burst beyond the business pages into the world of John Le Carré - where very rich men checked into hotels under assumed names and switched allegiances after meetings at private airports - ripples spreading, as they continue to spread to this day, beyond the industry in which it was fought.

In what became known as "The Fight", Mittal Steel's audacious raid on arch rivals Arcelor involved most of the world's leading investment banks, many hedge funds and a posse of billionaires.

It became so racist and nationalistic that Presidents Chirac and Putin and the Prime Minister of India, Dr Manmohan Singh, were sucked into the fray, flanked by their ministers and advisers. All those who worked on it called it a "destination deal". There would be nothing quite like it again in their lifetimes.

In one corner was Lakshmi Niwas Mittal, born with nothing in Rajasthan, now the Andrew Carnegie of his day. Aged 56, he was the biggest maker of steel in the world and living in a €80 million house in London with a personal fortune of more than €24 billion, making him the fourth-richest man on the planet.

Following massive acquisitions in the old eastern bloc, he had turned a rustbucket bankrupt plant to profit in record time by cutting costs and ramping up production - especially in Kazakhstan, satisfying the demand for steel in neighbouring China. Following an initial foray into Indonesia in 1975, where he built a plant, he had gone on a series of daring raids to acquire former state-owned mills in Trinidad, Mexico and Algeria. Next, he scooped up former steel icons in the United States, like Bethlehem, which had gone into Chapter 11 bankruptcy.

Facing him in the other corner was 63-year-old Guy Dollé, chief executive of Arcelor, a global company headquartered in Luxembourg. The brilliant but irascible Frenchman had forged the former state-owned steel companies in France, Luxembourg and Spain, into what was now the world's second-biggest steel company. Arcelor was also the most technologically advanced and the most profitable. But it had a telling weakness. Highly profitable, its shares were widely held and undervalued, making it more than toothsome to a predator.

When two men at the top of their game adopt the same vision for the future of their industry, the collision of their companies and personal confrontation is inevitable - as has been seen recently when simmering hostility between Sir Anthony O'Reilly, chief executive of Independent News and Media, and telecoms tycoon Denis O'Brien broke out into open warfare, with O'Reilly accusing O'Brien of being a "dissident shareholder" for buying a "destabilising" stake in his company. But while that is a nasty battle over many millions, the Mittal/Arcelor war was played out in billions for a number one stake in a commodity that literally shapes the world we live in.

It was Lakshmi Mittal who first had the vision of steel's brave new world back in 1998 when he stood up in front of the industry's aristocracy in New York and told them that for steel to survive and break free of its ruinous history of boom and bust, it must cease to be made up of thousands of parochial and largely nationalised players serving only local markets, and consolidate into fewer bigger players with global free-market reach.

"For the long-term health of the industry it has to change," he said. Steel had to go the way of its major suppliers and customers - the iron ore companies and the auto manufacturers - and go international, if it was to have any clout over supply and demand.

By then one of Britain's wealthiest tycoons, worth £2.8 billion, Mittal was greeted with silence.

Like most people who pursue successful visions, the single-minded Mittal carried on buying up plants that nobody else wanted around the world. It was only in Ireland that Mittal's Midas touch deserted him, when in 2001 he pulled out of the former Irish Steel Haulbowline plant in Cork, which he had bought five years before for £1, at a few hours' notice, leaving behind debts of over €57 million and 400 people jobless. It was the first company he had ever shut down.

By 2005, his major rivals were in tune with his consolidating zeal, but, led by the newly-formed Arcelor, they were playing catch-up. Whether it was Nippon Steel, Posco or ThyssenKrupp, everyone was bursting to become a global player too, spreading risks and widening markets. Increasingly, Mittal and Dollé were locking horns at auctions in places like Turkey - most famously in Kiev in October 2005 where Mittal pipped him by paying $4.8 billion (€3 billion) for Ukraine's flagship steel mill, Kryvorizstal. Mittal saw an unhealthy pattern developing. The two companies were paying way over the odds. On what has now gone down as a seminal date in steel history, he invited Dollé to dinner at his London home on January 13th 2006.

"There is only one thing we can do for the benefit of both companies and the steel industry and that is to merge," Mittal told him. "Where we are strong, you are weak and you have great strengths that we don't have. We could become a great steel champion."

Dollé might have been the unassuming son of a stained-glass maker from Metz, but he was determined that the company he had fought to form would not be subsumed into that of his rival. It would also scupper his chances of becoming chairman. Arcelor, not Mittal, would lead the industry as the biggest player. Instead, he flew to Ontario and bought up high performing Canadian steel company Dofasco. Triumphant, he assumed that he had now made Arcelor too big and too expensive for Mittal to buy.

Time and again, assumption was to prove a key weakness in Arcelor's defence. Mittal responded by launching his opening bid for Arcelor on January 27th, 2006, while Dollé, fired by victory, was at 37,000 feet on his way back from Canada. Mittal's offer was worth €18.6 billion, a 27 per cent premium on Arcelor's closing share price the previous day. The industry, and Dollé, were rocked at the scale and the speed of it all.

"Mittal has the risk appetite of someone from an emerging country," says Jeremy Fletcher, managing director of the investment banking division of Credit Suisse, that has backed Mittal since 1989. "He measures risk in a different way. It is trademark Mittal to launch a takeover with no detailed idea of how to execute it. He has the vision, sees the prize, but brings in others to help him do the execution."

Mittal keeps his core group of BlackBerry-wielding advisers small, and the chain of command short, with everybody in the loop.

When he decided to go for Arcelor he had his principal banking and legal advisers sit one side of the long walnut boardroom table seven floors above Berkeley Square in London's Mayfair, and gave each of them 15 minutes to present a report on the feasibility and structure of the deal, on the corporate financing, market reaction, anti-trust issues, minimum-acceptance thresholds, plus a whole range of technical, legal and financial challenges of an offer that would have to be piloted through the complex and separate regulatory authorities in the six countries where the two companies were based and listed.

The meeting was done and dusted in three hours. The initial offer for Arcelor was on the table days later. Mittal's lead lawyer, Pierre Yves-Chabert, of US legal firm Cleary Gottlieb Steen & Hamilton, was amazed. "In all the takeovers I have worked on, this kind of meeting normally takes weeks, interspersed with fly-pasts of emails."

Mittal's other skill is that he listens to his advisers and is prepared to increase or improve his offer when the game dictates, says Yoel Zaoui, the vastly experienced head of investment banking, Europe, at Goldman Sachs, who led Mittal's team. "There are a lot of big companies where you are brought in to work on the deal but you are not privvy to everything. With Lakshmi I don't know if I was 100 per cent clued into what he was thinking but it was pretty close. We were talking six times a day until the deal was done."

"We move very fast," admits Mittal's son, confidante and chief financial officer, 32-year-old Aditya. "But we are not gamblers. Aggressive yes, but we are very focused." When he first joined his father to handle mergers and acquisitions, a rival studied Aditya Mittal's business card and remarked: "It says you are head of M&A - surely it is just A."

"We do the due diligence, and if the numbers work, we move," says the younger Mittal. "Where others saw the plant we bought in Kazakhstan losing a million a day and pulled back, we saw the chance to make steel for the Chinese market that we knew was going to boom."

Without the cash generation from Kazakhstan it is unlikely that Mittal could ever have staged a bid for Arcelor. There is no doubt that, after its initial shock, Arcelor fought "the mother of all defences" that Morgan Stanley's Chairman of European Mergers and Acquisitions Michael Zaoui - the flamboyant brother of Goldman's more forensic Yoel - promised when he arrived to give the company's board a strategy.

"Slow this thing down, play for time," is not what target companies want to hear, and Arcelor was no exception. But the 100 lawyers from Skadden, Arps, Slate, Meagher & Flom used every trick in the regulatory book to slow and frustrate Mittal's offer going public, while they and eight investment banks tried to woo shareholders to their side and find a white knight who would come to Arcelor's rescue as a full partner or significant blocking shareholder.

They even made Dofasco a ward of court by putting it into an obscure Dutch trust known as a Stichting, so Mittal could not sell the Canadian company in a side deal he had fixed with with ThyssenKrupp to avoid potential problems with North American competition regulators. The German steelmaker, having pledged to Mittal, then tried to become a white knight for Arcelor.

Frustrated by Arcelor intransigence and German double-dealing, Mittal tried a ploy of its own. Goldman Sachs persuaded 30 per cent of Arcelor shareholders to sign a letter calling for an EGM to rule on Mittal's offer. Arcelor responded by claiming that not all those signing the letter were beneficial shareholders, which set off a new argument about the rules relating to stock lending where investors hire out shareholdings and attendant voting rights to third parties in return for a fat fee. It's a controversy that still simmers.

For Michael Zaoui, the ultimate winner had to be the shareholders. And for the first time, two brothers on opposing sides could walk away claiming victory.

When Mittal finally won Arcelor, the deal had cost him €40.4 a share, a 50 per cent improvement on his opening offer and placing Arcelor at €25.4 billion. He had also been persuaded by Yoel Zaoui to reduce the Mittal family's controlling interest to a more investor-friendly 43 per cent, although there is no doubt where the real power in the new company still resides. ArcelorMittal, the world's first 100 million-tonne steel producer, paid Mittal a dividend of nearly £394 million (almost €500 million) in February this year.

What sank Arcelor was its communications strategy. Guy Dollé, no longer with the company, takes full responsibility for turning the battle personal. In a state of shock at Mittal's opening offer, he came out throwing big but badly-aimed punches.

He referred to Mittal Steel as "a company of Indians" trying to buy Arcelor with "monkey money". Jacques Chirac and his minister of economy, finance and industry, Thierry Bretton, insulted and angered by the speed of Mittal's bid, weighed in, lecturing him in person about the "European way" of doing things. Luxembourg Prime Minister Jean-Claude Juncker was similarly hostile.

India joined in with protests at European racism from India's minister of commerce and industry Kamal Nath, who EU commissioner Peter Mandelson tried to pacify.

Refusing to join in the high-level scrapping, Mittal, who has always enjoyed using stealth diplomacy to great effect, wooed French billionaire Francois Pinault, the owner of Gucci, to his board.

The Frenchman said he was taking a stand against the hysteria at the Indian industrialist being generated by some of his countrymen who called themselves "economic patriots". Arcelor failed to notice the tide was changing.

When it announced it was going to be saved from Mittal by merging with Russian steelmaker SeverStal - a deal it tried unsuccessfully to railroad through its shareholders - Arcelor chairman Joseph Kinsch described SeverStal's Alexey Mordashov, one of Putin's favourite oligarchs, as a "true European".

"I am still surprised at the emotional stir," says Mittal, who has now been accepted in France to such an extent that he sits as non-executive director on the board of aerospace company EADS. "But," he adds, "nobody ever questioned the industrial logic of the deal."

Mittal, who cloaks his ego and ambition in smooth unsentimentality, is driven to create "the world's greatest steel institution". By personalising its opposition, "old Europe" ignored that he is merely in the vanguard of a number of confident Indian entrepreneurs who regard the world as open for takeover.

Since the Arcelor battle, Tata has bought Corus and those essentially British marques Land Rover and Jaguar. Four of the world's top eight billionaires on the latest Forbes list are Indian. Ultimately, Arcelor's social model involving trade unions and politicians in decision-making and putting stakeholders ahead of shareholders was no match for Mittal's focused, market-driven acquisition machine.

The lesson for all industries is that the shareholder always wins.

While Mittal is still keen to increase his stake in world steel, alongside new forays into oil, Messrs O'Brien and O'Reilly might reflect that epithets win few friends, and no battles, in today's global world.

Cold Steel: Britain's Richest Man and the Multi-Billion-Dollar Battle for a Global Empire by Tim Bouquet and Byron Ousey is published by Little, Brown at £12.99 (€16)