The Hindu Business Line : Esmark asks its stockholders to reject Severstal offer

NEW YORK: Paving way for Indian conglomerate Essar to clinch the Esmark Inc deal, the US steel major has asked its stockholders to reject rival bidder Severstal's offer, saying the cash offer proposed by the Russian steel player for acquisition is inadeq uate.

In a filing to the US market regulator Securities and Exchange Commission, Esmark said its Board of Directors after thoroughly reviewing Severstal's unsolicited conditional tender offer determined that the $17 per share cash offer by the Russian steel ma jor is inadequate and contrary to the best interests of Esmark's stockholders.

"The Board recommended that Esmark's stockholders reject Severstal's offer because of a number of reasons, the most compelling being the price proposed by Essar, which is $2 greater than the price offered by Severstal,'' Esmark said.

A couple of days back, Essar Steel Holding Ltd had apprised the Esmark Board about its intentions to increase its purchase price to $19 per share upon execution of a proposed merger agreement with the target company.

"Accordingly, the Board recommends that stockholders not to tender any shares to Severstal,'' Esmark said. Esmark Chairman and CEO James P Bouchard said the company has embarked upon a process to provide maximum value to its stockholders with the added benefit of providing what is best for its employees and the communities in which the Esmark companies are located.

"We continue to invite bidders, including Severstal, to provide a superior proposal to that of Essar. To date, Essar has stepped up to the plate for our stockholders first in providing financing to the company at a critical time and now by announcing tha t it will increase its offer to $19 per share,'' Mr Bouchard said. - PTI

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