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Esmark’s stockholder favours Severstal to Essar

NEW DELHI: Essar Steel’s bid to acquire Esmark has come for a strong opposition from U.S. steel maker’s major stockholder Franklin Mutual Advisers (FMA), which has favoured Esmark’s agreement with Russia’s steel giant OAO Severstal.

“We urge the board of directors and management to maximise value, to move expeditiously to conclude an agreement with Severstal and to bring this opportunity to Esmark’s stockholders,” FMA said in an e-mail to Esmark.

Favouring Severstal, FMA Chief Executive Officer Peter Langerman said: “... United Steelworkers (USW) opposition to the Essar transaction will be difficult, if not impossible, to overcome...” USW, as the major trade union in the U.S., is directly involved in the sale process of Esmark.

Only a few days ago, Indian conglomerate Essar group’s $1.1 billion takeover offer for Esmark was rivalled by Severstal. Both Essar and Severstal have offered $17 a share for Esmark.

Mr. Langerman said that in contrast to the Severstal proposal, which enjoys USW backing and has already satisfied the conditions imposed by the company, the Essar proposal was subject to the expiration of the USW’s lengthy “right to bid period.”

FMA said USW had repeatedly made it clear that it intended to enforce the rights it asserts and would actively oppose and block the Essar transaction.

As a major stockholder, FMA extended its support to the decision of Esmark’s board of directors to pursue a cash sale of the entire company to a strong industry participant.

“It is a correct decision and one we will support,” FMA said. — PTI

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