Wait & watch, Esmark tells shareholders
Wants investors not to take any action on severstal offer before board decision.
By TNN |
MUMBAI: US steel maker Esmark has asked its shareholders not to respond to the Russian firm Severstal���s unsolicited offer to takeover the company which the Indian group Essar is keen to acquire.
The Russian mining company Severstal formally launched the offer, on Friday, to acquire the entire shareholding of Esmark which had agreed to a similar bid from Essar a month ago.
Esmark had also taken a short-term loan from Essar to restructure its debt. Industry experts feel the Esmark communication tilts the takeover battle, albeit marginally, in favour of Essar.
Esmark told its shareholders that its board of directors will ���examine and consider the Severstal offer, consistent with its fiduciary duties and the company���s obligations under its memorandum of agreement with Essar Holdings��� latest by June 13.
���The Esmark board urges its shareholders to take no action with respect to the Severstal offer until it makes its recommendation.���
Severstal announced on Friday its tender offer of $17 a share to acquire all outstanding common stocks of Esmark. The offer is scheduled to expire on June 26 and is conditional upon the termination of the agreement between Esmark and Essar.
Severstal got the support of the United Steelworkers Union (USW), the main labour union of Esmark, as well as Franklin Mutual Advisor, Esmark���s largest shareholder.
A clearer picture would emerge after the Esmark board takes a decision next week. Since both offers have similar terms and condition, the recommendation of the Esmark board may play a role in deciding the fate of the bidders, feel industry circles. As things stand both bidders may sweeten their offers, if needed.
Although the two bidders have spelt out their plans, the Esmark stock has been steadily going up on the back of possible bidding war. It rose 12% in a month to close at $18.80 on Tuesday.
The Russian mining company Severstal formally launched the offer, on Friday, to acquire the entire shareholding of Esmark which had agreed to a similar bid from Essar a month ago.
Esmark had also taken a short-term loan from Essar to restructure its debt. Industry experts feel the Esmark communication tilts the takeover battle, albeit marginally, in favour of Essar.
Esmark told its shareholders that its board of directors will ���examine and consider the Severstal offer, consistent with its fiduciary duties and the company���s obligations under its memorandum of agreement with Essar Holdings��� latest by June 13.
���The Esmark board urges its shareholders to take no action with respect to the Severstal offer until it makes its recommendation.���
Severstal announced on Friday its tender offer of $17 a share to acquire all outstanding common stocks of Esmark. The offer is scheduled to expire on June 26 and is conditional upon the termination of the agreement between Esmark and Essar.
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Severstal got the support of the United Steelworkers Union (USW), the main labour union of Esmark, as well as Franklin Mutual Advisor, Esmark���s largest shareholder.
A clearer picture would emerge after the Esmark board takes a decision next week. Since both offers have similar terms and condition, the recommendation of the Esmark board may play a role in deciding the fate of the bidders, feel industry circles. As things stand both bidders may sweeten their offers, if needed.
Although the two bidders have spelt out their plans, the Esmark stock has been steadily going up on the back of possible bidding war. It rose 12% in a month to close at $18.80 on Tuesday.
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