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Essar Steel considers raising bid for Esmark
Posted by Yogesh on Friday, 6 June, 2008
NEW YORK – Essar Steel Holdings Ltd. said Friday it is considering increasing its $17-per-share bid for steelmaker and distributor Esmark Inc.
Essar said it would consider making an increased offer for Esmark after obtaining more information from the Wheeling, W.Va.-based company.
Following a formal bid process, Esmark accepted Essar’s offer — valued at about $670 million, or $1.1 billion including debt — on April 30.
Esmark subsequently agreed to pay Essar a $20.5 million fee if the buyout offer fails.
But the United Steelworkers union has said it will oppose the buyout, contending that Esmark accepted the deal without giving the USW adequate notice or a chance to put forth an alternative. The USW contract allows the union to reject deals that change control of Esmark.
Late last month, Russian metals and mining company OAO Severstal made a rival $17-per-share cash offer, claiming it had the support of the union. Severstal has started offering to buy shares, but Esmark has asked stockholders to wait until it gives a formal opinion on the deal in mid-June before agreeing to sell shares to the company.
Essar is specifically seeking information on “any arrangements or understanding” that Severstal may have had with shareholder Franklin Mutual Advisers LLC. According to a filing with the Securities and Exchange Commission on Thursday, Franklin has agreed to tender its shares into the Severstal offer. Franklin owns 23.7 million shares, or a 60.1 percent stake, according to the filing. Source CNBC
