Mumbai: Despite withdrawing from a bidding war for US steel producer Esmark Inc.,Essar Steel Holdings Ltd will keep looking for opportunities in North America as it seeks to raise output in the world’s second biggest market.
Essar, beaten by Russia’s largest steel maker OAO Severstal in the bid for Esmark, wants to increase capacity to 25 million tonnes (mt) by expanding output and acquiring mills?globally, chairman Shashi Ruia said in a statement.
Essar and Severstal were fighting for Esmark to add steel making capacity in the US, where a shortage of steel has pushed prices to record levels.
Severstal boosted its takeover offer by 13% to $775 million (Rs3,309 crore) and entered a merger agreement with the target company.
Investors will receive $19.25 for each Esmark share, up from an earlier bid of $17, Severstal—based in Cherepovets, Russia—said in a statement on Wednesday.
Esmark’s board of directors will recommend the offer, the company said in a separate statement, adding that transactions in the merger agreement are subject to customary closing conditions.
The bid, which tops a $19-a-share bid from Essar, India’s fourth largest steelmaker, will expire at midnight on 18 July, Esmark said.
Severstal has the backing of Esmark’s largest union, along with its largest shareholder, Franklin Mutual Advisers LLC.
Severstal spent $950 million this year buying ArcelorMittal’s Sparrows Point steel plant near Baltimore, US, and WCI Steel Inc.
It has said it wanted to buy Esmark, owner of the Wheeling-Pittsburgh steelworks, to sell a wider range of steel products in the US and because its Sparrows Point plant can provide semi-finished steel slabs to boost production.
Essar will increase output at its Canadian unit, Algoma Steel, to 4mt and is also building a 2.5mt-a-year plant in Trinidad and Tobago.
The company has the capacity to produce 4.6mt in India.