Severstal | 06 February 2008 г. | 11:47

Severstal announces tender offer to acquire Esmark Incorporated; USW in full support of Severstal offer

Severstal announces tender offer to acquire Esmark Incorporated; USW in full support of Severstal offer
Severstal  announced that it has commenced an all cash $17.00 per share tender offer to acquire all of the outstanding shares of common stock of Esmark Incorporated (NSDQ: ESMK), a manufacturer and distributor of flat rolled and other steel products. 
The tender offer is scheduled to expire at 12:00 midnight, Eastern Daylight Time, on June 26, 2008, unless extended. Following completion of the tender offer, subject to the terms and conditions set forth in the Offer to Purchase, Severstal intends to consummate a second-step merger where all remaining Esmark stockholders will receive the same cash price paid in the tender offer, subject to any available appraisal rights under Delaware law.
The Severstal offer is conditioned, among other things, upon the termination of the Memorandum of Agreement, dated April 30, 2008, between Esmark and Essar Steel Holdings Ltd. and, if entered into prior to the expiration of the Severstal tender offer, the Agreement and Plan of Merger between Esmark and Essar. Other customary terms and conditions also apply. For specific detail on other terms, conditions and other details of the offer, please refer to the filing Severstal will make later today with the U.S. Securities and Exchange Commission.
The tender offer is not conditioned on financing.
Severstal’s offer is the only proposed bid for Esmark that has the full endorsement of the United Steelworkers (“USW”).  Under the USW’s collective bargaining agreement with Esmark, Esmark cannot close on a sale transaction unless the purchaser has entered into an agreement with the USW that satisfies the successorship clause of the collective bargaining agreement.  Severstal and the USW have entered into an agreement that satisfies the successorship clause of the collective bargaining agreement.
If the conditions to the offer are satisfied and Severstal completes the second-step merger, Severstal will acquire all of the Esmark businesses, including: Wheeling-Pittsburgh Steel Corporation (“Wheeling Pitt”), Esmark Steel Services Group, Inc. (“ESSG”) and  remaining 50% ownership of the joint venture Mountain State Carbon, a blast furnace coking coal production facility in West Virginia.
The acquisition of Esmark would provide Severstal with an opportunity to grow its US footprint while becoming one of North America’s leading flat steel producers. Severstal’s US market position would be enhanced by the increased capacity for the production of crude and finished steel products, and geographically complemented by the integration into its portfolio of Esmark’s network of service centers and processor businesses in the Midwestern United States. Severstal would also benefit from Wheeling Pitt’s central location between the Company’s existing US assets and its broad reach into the US industrial market by virtue of its location on the Ohio River and access to major highways and railways.
Merrill Lynch is the Dealer Manager, MacKenzie Partners, Inc. is the Information Agent and Citibank, N.A. is the Depositary for the tender offer.  Skadden, Arps, Slate, Meagher & Flom LLP is legal counsel to Severstal.
Source: Metal Supply and Sales
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