Essar group to acquire US steel maker for $1 bn

May 1st, 2008 - 8:26 pm ICT by admin  

New Delhi, May 1 (IANS) The Ruia-controlled Essar Steel Holdings Thursday disclosed it is acquiring the US-based steel producer Esmark Inc for an estimated $1 billion. “The proposed tender offer was unanimously accepted by the board of Esmark Inc and is subject to customary approvals, including those of the US government and united steel workers,” the group said in a statement.

Esmark is a steel production and distribution company with an annual capacity of 2.4 million tonnes and distribution centres across the US. A definitive pact is to be entered into in 52 days, the group said.

“This is another step in realizing our global steel vision of having world class, low-cost assets, with a global footprint,” said Shashi Ruia, chairman of Essar Global, the holding arm of Essar Steel Holdings.

“Having acquired Algoma and Minnesota Steel last year, this acquisition provides us with an excellent platform for the Canadian and North American markets,” he said, referring to the two major acquisitions made by the group last year.

“With the acquisitions of Esmark and projects under implementation in Trinidad and Tobago, Essar Steel Holdings will have a 10 million tonnes of flat steel production in the Americas.”

Within 10 days of entering into definitive documentation with Esmark, a wholly owned subsidiary of Essar will carry forward a two-step acquisition by means of a cash offer for all outstanding shares of Esmark’s stock at $17.00 per share.

“If more than 50 percent of the outstanding shares are tendered, then a second-step, cash-out merger would follow in which all remaining shares of Esmark stock will be converted into the right to receive $17,” the company said.

Esmark is a vertically integrated steel maker and distributor and combined steel production capabilities through both blast and electric arc furnace technologies and has a broad customer base concentrated in Ohio Valley and the US Midwest.

Currently headquartered at Wheeling in West Virginia, the company is a producer of carbon flat-rolled products for the construction, container, appliances, auto and processor.

Besides India, Essar Steel has a presence in Canada, the US, the Middle East and Asia and 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 its capacity rise to 20 to 25 million tons by 2012, the company said.

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