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Severstal says its bid for Esmark superior to offer from Essar Steel
By Lisa Kerner
Charlotte, N.C., May 20 - OAO Severstal announced it offered to acquire Esmark Inc. for $17.00 per share in cash.
The offer is not contingent on financing, and Severstal expects to consummate the deal within 40 days after entering into a merger agreement.
Severstal said its proposal constitutes a superior proposal to Essar Steel Holdings Ltd.'s offer for Esmark, a Wheeling, W.V., steel producer.
While Essar Steel's April 30 offer to buy Esmark for $670 million was rejected by the United Steelworkers, the union supports Severstal's five-year capital improvement plan for Esmark, a Severstal news release said.
Severstal noted that potential synergies with Esmark would be further enhanced once Severstal closes its acquisition of WCI Steel Inc.
It was previously reported that Severstal, a Moscow-based metals and mining company, agreed to acquire WCI Steel for $140 million in total cash, or about $3.29 per share, as part of its "disciplined approach" to growing its U.S. business.
"While we hope to work together with Esmark and its board of directors to negotiate a mutually acceptable merger agreement, we believe that it is critical to give Esmark's stockholders a chance to decide for themselves and that they will find Severstal's proposal much more compelling than the Essar Steel transaction," Severstal International chief executive officer Gregory Mason said in the release.
Merrill Lynch and Citi are advising Severstal.
Essar Steel, part of Essar Global Ltd., is an Essar, India, flat carbon steel manufacturer.
WCI Steel, a Warren, Ohio-based producer of value-added, custom steel products, is not currently a public reporting company.
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