Essar Steel to acquire American steelmaker Esmark for $669 million

Tata Steel and ArcelorMittal are not the only Indian names in steel (the Mittal connection, not the Arcelor part) making news around the world for their acquisitions. I

Essar Steel Holdings Ltd has announced a $669-million cash buyout offer for American steelmaker and distributor Esmark Inc. Acquiring Esmark would be the latest in a string of aggressive North American moves by Essar.

In 2007 Chicago-based Esmark had formed a joint venture, called E2 Acquisition Corp, along with Brazilian iron-ore producer Companhia Vale do Rio Doce and Ukrainian steelmaker Industrial Union of Donbass Corp to acquire Mittal Steel's Sparrows Point mill near Baltimore, in the US, clearing the way for it to to complete its acquisition of Arcelor SA. (See: Esmark-led group to acquire Mittal Steel's Baltimore plant) 

Esmark said on Wednesday that its board has unanimously accepted a buyout offer of $17 per share, for the company's 39.3 million outstanding shares. The offer is 13.5 per cent higher than Tuesday's closing price. After the announcement of the deal, Esmark's shares rose 12 per cent in mid-day trading.

Esmark said it planned to enter a "52-day right to bid period" required in the collective bargaining agreement with the United Steelworkers. Essar's offer is also subject to regulatory approvals.

Franklin Mutual Advisers LLC, which owned 23.7 million shares of Esmark, or slightly more than 60 percent, as of Dec. 31, 2007, stands to gain most from this deal, monetarily.