Essar Steel ups bid for Esmark to $19 per share, will work with union to close the deal

By Lisa Kerner

Charlotte, N.C., June 11 - Essar Steel Holdings Ltd. said it intends to increase its offer for Esmark Inc. to $19 per share.

Esmark's board has been notified of the increased offer price, according to an Essar Steel news release.

The companies entered into an agreement on April 30 in which Essar Steel would acquire Esmark for $17 per share, or $670 million. Essar Steel also extended a $110 million loan to Esmark to address a potential default, the release said.

Essar Steel said it is prepared to recognize the United Steelworkers, assume the basic labor agreement and negotiate a new collective bargaining agreement on an expedited basis.

As part of its plans for Esmark, Essar Steel proposed a capital expenditure program of $525 million for Esmark's Ohio and West Virginia manufacturing facilities over the next five years.

It was previously reported that before upping its offer, Essar Steel wanted information on any arrangements or understanding that OAO Severstal may have had with Franklin Mutual Advisers, LLC, Esmark's largest shareholder.

On June 5, Franklin Mutual Advisers announced it would tender all of its 23,740,689 shares, or 60.1%, of Esmark into Severstal's tender offer for the company.

While Essar Steel and Severstal both offered $17 per share for the Wheeling, W.Va., steel producer, the United Steelworkers supported the Severstal deal and rejected Essar Steel's offer.

Severstal, a Moscow-based metals and mining company, noted its offer is not contingent on financing, and Severstal expected to consummate a deal within 40 days after entering into a merger agreement.

Essar Steel is a flat carbon steel manufacturer based in Essar, India.

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