Severstal sweetens offer, agrees to acquire Esmark

NEW YORK (Reuters) - Russian metals giant OAO Severstal CHMF.MM said on Wednesday it agreed to acquire U.S. steel company Esmark Inc ESMK.O after increasing its previous offer, which had been rejected.

Severstal will pay $19.25 per share in cash and Esmark’s board will recommend that shareholders tender their shares to Severstal, the company said in a release issued in Moscow.

It had previously offered $17 per share for Wheeling, West Virginia-based Esmark, which owns steelmaker Wheeling-Pittsburgh.

The offer has a total equity value of approximately $775 million, said Severstal. It has also agreed to purchase Esmark’s aggregate $110 million term loan facilities from India’s Essar Steel Holdings Ltd, which had also targeted Esmark for takeover.

Severstal’s bid was backed by the United Steelworkers union, which had threatened to block the offer from Essar.

Reporting by Steve James