The US-based steel producer and distributor Esmark Incorporated (Esmark) has announced that it has agreed to the material terms of a proposed tender offer and merger with Indian steelmaker Essar Steel Holding Limited for a consideration of $17 per share.
Esmark plans to enter into a definitive agreement on the matter with Essar upon expiration or waiver of the approximately 52-day period set forth in the collective bargaining agreement with the United Steelworkers.
Within 10 days following the conclusion of the definitive agreement, Essar will commence the two-step acquisition via a front-end, cash tender offer for all outstanding shares of Esmark. In the event of acquisition of 50 percent of the outstanding shares, a second step involving a cash-out merger will be implemented, in which all remaining shares will be converted into the right to receive $17.
Chairman and chief executive officer of Esmark, James P. Bouchard, has commented, "The proposed merger with Essar is the culmination of an extensive review of the strategic options available to the company that included exploratory discussions with a number of potential partners. With spiraling raw material and transportation costs, difficulty securing long-term financing commitments and the investment challenges associated with maximizing steel production capacity, we were convinced that a strategic partner like Essar was the best possible solution for the long-term prospects of the company moving forward."
Meanwhile, President of Essar Americas, Madhu S. Vuppuluri, said, "Essar is very excited about the potential merger with a great company located in the steel capital of the United States. We plan to make significant investments into Wheeling-Pittsburgh Steel to make it a low cost, technologically advanced steel producer. We look forward to a strong relationship with the United Steelworkers, our employees, as well as the local communities."