By Lisa Kerner
Charlotte, N.C., June 25 - Esmark Inc. agreed to be acquired by OAO Severstal for $19.25 in a transaction valued at $1.25 billion, including debt, the companies announced.
Severstal amended its tender offer, increasing its offer price to $19.25 per share from $17.00, and Esmark's board of directors recommended shareholders tender their shares to Severstal.
The amended tender offer is expected to end at midnight ET on July 18, extended from June 25, an Esmark news release stated.
In addition to the merger agreement, Severstal agreed to purchase Esmark's $110 million term loan facilities from Essar Steel Holdings Ltd., a flat carbon steel manufacturer based in Essar, India.
Severstal noted it expects the transaction to be accretive in 2009.
"We have maintained from the outset of negotiations with Severstal and Essar that we would seek to maximize shareholder value and secure a more predictable and prosperous future for the company," Esmark chairman and chief executive officer James P. Bouchard stated in the release.
In April, Essar Steel agreed to acquire Esmark for $17.00 per share, or $670 million, and extended a $110 million loan to Esmark to address a potential default, according to a prior news release.
Like Essar Steel, Severstal offered $17.00 per share for the Wheeling, W.Va., steel producer. However, its offer had the backing of the United Steelworkers, which rejected Essar Steel's offer, a prior news release said.
Essar Steel increased its offer for Esmark to $19.00 per share and said it was prepared to recognize the USW, assume the basic labor agreement and negotiate a new collective bargaining agreement on an expedited basis.
It was announced on Wednesday that Essar Steel withdrew its bid for Severstal based on USW's support of Severstal and its belief that the $19.00-per-share offer reflects a full and fair value for Esmark.
Esmark was advised by UBS Investment Bank, Charlestown Capital Advisors and McGuireWoods LLP.
Merrill Lynch, Citi and Skadden, Arps, Slate, Meagher & Flom LLP are advising Severstal.
Information agent for the tender offer is MacKenzie Partners, Inc.
Severstal is a Moscow-based metals and mining company.
| Acquirer: | OAO Severstal
|
| Target: | Esmark Inc.
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| Announcement date: | June 25
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| Transaction total: | $1.25 billion
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| Price per share: | $19.25
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| Expected closing: | Upon approvals
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| Stock price of target: | Nasdaq: ESK: $20.03 on June 24
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