The Russian steelmaker Severstal has announced its offer to buy all outstanding shares in US-based steel producer and distributor Esmark Incorporated for $17.00 per share in cash.
Severstal submitted its proposal to Esmark after the United Steelworkers (USW) vetoed Esmark's agreement to be acquired by Indian steelmaker Essar Steel. Under the USW's contract with Esmark, which is set to expire on September 1, the union has the right to veto any deal that changes control of Esmark.
Unlike Essar's proposal, Severstal's offer has the full support of the USW. Severstal and the USW have also entered into an agreement that satisfies the successorship clause of the labor agreement.
Commenting on its proposal, Severstal stated that the company is best positioned to optimize the value of Esmark by creating complementary product lines, geographical alignment and operational synergies. Severstal went on to say that it has developed a highly credible restructuring plan designed to derive maximum value from Esmark, including a five-year capital improvement plan that carries the full support of the USW. "Together, the combined company will become one of the North American leaders in flat rolled steel products," the Severstal statement said.