Esmark bails on Essar, agrees to Severstal buyout

Wed Jun 25, 2008 5:03 PM EDT

WHEELING — Russian metals and mining company OAO Severstal says it has an agreement to buy West Virginia-based Esmark Inc. for $19.25 per share.

Including the assumption of debt, that puts the value of the deal at $1.25 billion.

Esmark has been at the center of a bidding war between Severstal and India's Essar Steel Holdings.

While management had previously labeled Essar's offer superior, the United Steelworkers union was backing a buyout by Severstal.

Esmark is now urging investors to tender their shares to Severstal by July 18.

Severstal's offer is worth $775 million, but it has also agreed to assume $400 million in debt and to cover a $110 million term loan from Essar.

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