Severstal Gets Esmark
Severstal will buy Esmark after all. Yesterday, it raised its offer 13 percent to $775 million ($19.25 per share) and its competitor for the American company, the Indian Essar Steel Holdings Ltd., bowed out after a battle of many months for the property. Severstal announced that it had committed itself to the purchase. In the end, the company will cost Severstal $1.25 billion.
Esmark president Craig Bouchard praised Severstal for its “honest and professional negotiations.” The company’s chairman has already recommended to shareholders that they sell to Severstal by July 18. Bouchard also said that Esmark would turn a profit this quarter and would work synergistically with Severstal’s other American properties. United Steelworkers representative Tony Montana stated that the union had supported the Russian company from the start. Gregory Mason, deputy general director for production of Severstal and head of Severstal International, said that the company would invest about $250 million in Esmark in the next five years.
Esmark shares lost 6.6 percent yesterday, closing at $19.12. That means the company’s capitalization is $755.44 million. Therefore, the majority of shareholders can be expected to accept Severstal’s offer. Thus, Severstal has paid $531 per ton of capacity for Esmark, compared to $225 per ton for Sparrows Point and $268 per ton for WCI, its last American acquisitions. Analysts do not expect any benefit to Severstal from its new acquisition in the immediate future.
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All the Article in Russian as of June 27, 2008
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