Esmark rejects Severstal bid, accepts Essar's revised $750 million offer

13 June 2008

US steelmaker Esmark Inc has rejected a $670 million takeover offer from Russia's OAO Severstal, following a sweetened $19 a share offer by Essar Steel Holdings Ltd.

Essar's revised offer of $19 a share values Esmark at $750 million against Severstal's $17 a share which values it at $670 million.

Esmark's management had also endorsed Essar's initial offer of $17 a share which Severtal equalled. The Russian firm also  offered better terms acceptable the United Steelworkers union.

Essar, which had already extended a $110 million loan to Esmark to avoid a potential default, also offered to invest $525 million in capital improvements in Esmark's Ohio and West Virginia plants over the next five years.

Esmark's board of directors said it was not convinced of Severstal managing to close the deal. The board also cautioned shareholders against selling shares to Severstal.

Esmark said the Severstal offer was inadequate and called for better bids, including from fresh bidders.