Essar keeps mum on Severstal counter-bid for Esmark

NEW DELHI: Essar Steel kept quiet on Wednesday on a counter-bid by Russia steel giant OAO Severstal for US steelmaker Esmark Inc that could set the stage for a bidding war.

"We have no comment to make at the moment," Essar Steel general manager B Ganesh Pai said, a day after Severstal matched Essar's offer of 17 dollars a share for loss-making Esmark, based in Wheeling, West Virginia.

Severstal's cash offer which it valued at 1.24 billion dollars came after a bid in late April by Essar Steel, part of energy-to-telecoms conglomerate Essar Global Ltd, was rejected late last week by the United Steelworkers union.

The two international steelmakers are both seeking to aggressively muscle into the lucrative US market.
Severstal, which said it aims to turn Esmark into "one of the North American leaders in flat rolled steel products," noted in a statement that its proposal had the "full support" of the United Steelworkers.

"Severstal has developed a highly credible restructuring plan designed to derive maximum value from Esmark, including a five-year capital improvement plan that carries the full support of the United Steelworkers," the Russian company said in the statement on its web site.

Last Friday, the United Steelworkers said they would block Essar's proposed purchase of Esmark, contending it would violate the union's contract which gives it the right to reject any deal that changes control of the US company.

Esmark shares surged 16.88 percent, or 2.60 dollars, to 18 dollars in US trading on Tuesday following the announcement of Severstal's offer as investors bet on a bidding war for the US steelmaker.