Esmark falls for Severstals' revised $775 million bid; Essar withdraws offer

26 June 2008

Mumbai: Esmark Incorporated has entered into a definitive merger agreement with Russian steelmaker OAO Severstal after the latter raised its offer to $19.25 a share from the earlier $17 a share, taking its bid value to $775 million.

Severstal, Russia's largest producer of steel, boosted its takeover offer for US steelmaker Esmark Inc by 13 per cent to $775 million.

Severstal's $19.25 a share offer tops a $19-a-share bid from Essar Steel Holdings Ltd, which will expire at midnight of 18 July, Esmark said.

Essar today said it has withdrawn its offer for Esmark. In a statement released today, Essar Group chairman Shashi Ruia, however, said his company remained intent on increasing its capacity and will continue to look for acquisitions.

Severstal has the backing of Esmark's largest shareholder, Franklin Mutual Adviser LLC and its powerful union.

Esmark's board of directors will recommend shareholders to tender their shares, the company said in a separate statement. The transactions are subject to customary closing conditions, Esmark added.