Essar Steel acquires Esmark for $1.1 billion

Source: Exec

Date :01/05/2008 01:26:31

Essar Steel Holdings, the steel producer based in India, is to buy American steel producer and distributor Esmark Inc., in a deal worth $1.1 billion.

The US company accepted a cash offer of $17 per share, a 13.5 percent premium over Tuesday’s closing price.

James Bouchard, Esmark’s Chief Executive, said the firm needed a strategic partner in light of spiralling raw materials and transportation costs, difficulty securing long-term credit, and investment challenges.

Capacity

The acquisition will see the group’s steel production increase to approximately seven million tonnes in the US and Canada combined. Essar’s deal with Esmark has expanded the firm’s global reach and customer base in America, in line with the growth of the global market.

Last year Essar acquired Algoma Steel, based in Canada, for $1.6 billion and only days later acquired Minnesota Steel. The firm has been approaching companies with smaller capacities of one to two million tonne annual capacity over the past year.

The acquisitions mean that Essar Steel Holdings will have a capacity of ten million tonnes of flat steel production in the Americas in the next couple of years.

May 1, 2008