New Delhi: Indian conglomerate Essar group withdrew its $1.2-billion bid for acquiring US-based steel company Esmark following a higher bid by the Russian company which has full support of the unions.
Russian company Severstal has offered $19.25 a share, compared to $19 by the Essar group.
Essar Global, a subsidiary of Ruias-led Essar group, had also extended a $110 million dollar to Esmark, which helped the US steel company address a potential default.
The Indian firm has been in discussion with the United Steelworkers Union (USW) throughout the process, but later learnt of a supposed understanding between the USW and Severstal.
“Essar has been at disadvantage in not knowing the terms of the USW’s agreement with Severstal,” Essar said in a statement adding despite their offer to commence negotiations on renewal of basic labour agreement, the USW continued its support of Severstal and has assigned its right-to-bid to Russian company as well.
Commenting on the development, Shashi Ruia, Chairman of Essar Global, said: “Essar’s vision is to be a major steel producer integrated from mining to finished products with a global footprint.
“Essar will continue to focus on the North America market, and remains committed to increase its capacity to about 25 million tonnes globally by 2012,” he added.