The Hindu Business Line : Severstal charges Esmark of favouring Essar

NEW YORK: Russian steel giant Severstal, which has rivalled Ruias-led Essar group's takeover bid for US firm Esmark, has charged the target company of having "tipped the scales" in favour of a deal with the Indian suitor.

Expressing disappointment over Esmark board's recommendation to reject Severstal's offer, the Russian firm said that it would still continue with its efforts to conclude a deal.

"Notwithstanding your negative recommendation, Severstal intends to continue with its plans for a transaction with Esmark," Severstal said in a letter to Mr James Bouchard, CEO, Esmark.

The Russian steel major has also blamed that the "poison pill" adopted by Esmark board last week was structured in a way to benefit Essar's offer.

"We can only conclude that it is because you have determined to support Essar, over Severstal, for reasons that remain unknown to us for now," Severstal said about the poison pill - a shareholder rights agreement that is generally intended to prevent a h ostile takeover of the company.

Blaming that Esmark has "tipped the scales in favour of a transaction with Essar" on various aspects, Severstal reiterated its claim to be "best positioned" to strengthen and grow Esmark's current assets.

Severstal also said that its offer provided compelling value for the shareholders "through a transaction that can actually be realised," as compared to the proposed deal with Essar that "cannot realistically be consummated, and, thus, will not deliver va lue" to Esmark's shareholders. - PTI

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