The Hindu : Business : Essar Steel to acquire Esmark of U.S. for $1.1 b

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Friday, May 02, 2008
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Essar Steel to acquire Esmark of U.S. for $1.1 b

Ramnath Subbu

The latest buy will take co.’s capacity to 20-25 m tonnes

Deal subject to U.S. Govt. approval
Easy reach to North American markets

MUMBAI: Essar Steel Holdings Ltd. (ESHL), a part of Essar Global Ltd., on Thursday agreed to acquire Esmark of the U.S. at an estimated enterprise value of $1.1 billion (Rs. 4,500 crore).

ESHL has agreed to the material terms of a proposed tender offer for cash purchase price of $17 per share of all outstanding shares of Nasdaq listed Esmark.

Esmark is a steel production and distribution company with a capacity of 2.4 million tonnes annually and steel distribution centres across the U.S.

The proposed tender offer was unanimously accepted by the board of Esmark and is subject to customary approvals including those of the U.S. Government and the United Steel Workers.

Esmark plans to enter into definitive documentation upon expiration or waiver of the approximate 52 day ‘right to bid’ period set forth in the collective bargaining agreement with the United Steel Workers.

Shashi Ruia, Chairman, Essar Global, in a statement issued here, said, “This is one more step in realising our global steel vision of having world class low cost assets, with a global footprint. Having acquired Algoma and Minnesota Steel last year, this acquisition provides us with an excellent platform for the Canadian and North American markets. With the above acquisitions of Esmark and projects under implementation in Trinidad and Tobago, Essar Steel Holdings will have a ten million tonnes of flat steel production in the Americas.”

Within ten days of entering into definitive documentation, a wholly-owned subsidiary of Essar will effectuate the two-step acquisition by means of a front-end, cash tender offer for all of the outstanding shares of Esmark’s common stock, at $17 per share in cash. If more than 50 per cent of the outstanding shares are tendered, then a second-step, cash-out merger would follow in which all remaining shares of Esmark common stock will be converted into the right to receive $17.

ESHL is a global producer of steel covering India, Canada, the U.S., the Middle East and Asia.

It is a fully integrated flat carbon steel manufacturer from iron ore to ready-to-market products.

With a current capacity of 8.5 million tonnes, Essar’s expansion in India, Asia and North America will see capacity rise to 20 to 25 million tonnes by 2012.

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