The Ruias-controlled Essar Steel Holdings Ltd on Thursday withdrew its offer to buy US steel company Esmark on reports of Severstal revising its offer for Esmark to $19.25 a share, against Essar?s revised bid of $19 per share.
The company, in a release said, ?Essar has been in discussion with the United Steelworkers Union (USW) throughout the process. During the process, Essar learned of a supposed understanding between the USW and OAO Severstal, a Russian Steel concern.?
?We were at a disadvantage in not knowing the terms of the employees union?s agreement with Severstal,” it adds.
The Essar Steel stock fell a steep 9.44% on the Bombay Stock Exchange on Thursday to close at Rs 51.80.
Meanwhile, Russian metals and mining company OAO Severstal has said it has an agreement to buy West Virginia-based Esmark Inc for $19.25 per share. That puts the value of the deal, including the assumption of debt and loans, at $1.25 billion.
Essar Steel?s bid at $19 a share had valued Esmark at $1.2 billion, including the extended loan. The company had initially bid at $17 for each Esmark share. Essar too had begun negotiations with Esmark employees? union, but the union was in favour of Severstal, the company said.
As part of the deal, Essar had also offered a $110-million loan (Rs 469 crore) to Esmark, which has 2.5-million tonne steel making capacity.
Shashi Ruia, chairman, Essar Global said, ?Essar will continue to focus on the North American market and remain committed to increase its capacity to about 25 million tonne globally by 2012. This will be achieved both through building greenfield projects as well as brownfield development of world class low-cost assets. Moreover, Essar will continue to pursue M&A transactions internationally and will look at opportunities consistent with its vision? he said.
Esmark issued a statement urging investors to tender their shares to Severstal by midnight July 18. ?This is an historic day,?? said Esmark chairman & CEO James Bouchard.