VSŽ President Gabriel Eichler (right) was seen by many as a magician who managed to pull a strong investor out of a hat for the Slovak firm. Prime Minister Mikuláš Dzurinda seemed deeply gratified.
While not everything went exactly to US Steel's plans, by and large the sale was a triumph for the government and has since been widely viewed as a confidence booster for them and their ability to attract investment.
The roots of the deal go back to late 1998 and the appointment of Gabriel Eichler as president of VSŽ along with the election of a new set of managers and board members to replace the old guard of the father and son team of Alexander and Július Rezeš.
The firm's massive debts - more than $400 million including taxes owed to the government - were slowly uncovered. However, Eichler and the government set themselves the task of selling the steel manufacturer and throughout 1999 and early this year US Steel was wooed, to the point where it was granted exclusive negotiating rights on buying the firm, and a memorandum of understanding on US Steel's acquisition and the creation of a new company owning all VSŽ's healthy steel-related subsidiaries was signed in March.
However, unions, led by Jaroslav Gruber's Hutník trade union, itself a shareholder in the Košice steel monolith, seemed determined to block the deal, especially when US Steel made public its purchase price for the company in May
Under the US firm's plans, shareholders would receive $60 million immediately with a further $25 million to $75 million in 2003 dependent upon the company's performance. US Steel would also take on the firm's debts. Gruber and other minority shareholders argued that they were being unfairly treated and that their rights as minority shareholders were being ignored.
An extra twist was added to the tale when the Indian steel firm ISPAT declared it wanted to buy VSŽ, offering a much higher price to shareholders. While few analysts doubted that the sale to US Steel would ultimately go ahead, the government was unwilling to allow the deal to be derailed and took the precaution of using firms in which it already had a controlling stake, such as oil pipeline operator Transpetrol, to buy up VSŽ shares ahead of a crucial October shareholders' vote on the deal.
In the final shareholders meeting for approval of the acquisition, an overwhelming 99% of the 83% present at the meeting voted in favour of the takeover.
Analysts immediately said that by securing the investment of US Steel, the 'floodgates would open' to further investment, particularly from other US companies.