Steel producer Esmark accepts $669M buyout from India firm

CHICAGO HEIGHTS | Takeover subject to union OK, approval by regulators

Steelmaker and distributor Esmark Inc. said Wednesday it has accepted a cash buyout offer valued at about $669 million from India's Essar Steel Holdings Ltd.

Esmark, run by Chicago Heights brothers James Bouchard, CEO, and Craig Bouchard, president, said Wednesday its board unanimously accepted a buyout offer of $17 per share. The offer is 13.5 percent higher than Tuesday's closing price.

Its shares rose $1.71, or 11 percent, to close Wednesday at $16.69.

The Bouchards put the value of the deal at $1.1 billion, including the assumption of $430 million in debt.

Esmark now enters a 52-day ''right to bid'' period required in the collective bargaining agreement with the United Steelworkers, which has the right to reject any deal. Essar's deal also requires regulatory approvals.

The biggest potential winner in the buyout is Franklin Mutual Advisers LLC, which owned 23.7 million shares of Esmark, or slightly more than 60 percent, as of Dec. 31, 2007.

James Bouchard said Esmark had been in talks with several potential partners.

Esmark, formerly based in Chicago Heights, acquired steelmaker Wheeling-Pitt in November, culminating an effort to add a steel producer to its distribution network, which serves 2,000 customers in the Midwest.

Twice-bankrupt Wheeling-Pitt had struggled financially for years and was mired in $525 million in debt at the time. Recently, the Bouchards announced plans to shut down some Wheeling-Pitt operations.

Essar Americas President Madhu S. Vuppuluri said his company plans to invest in Wheeling-Pitt to make it a low cost, technologically advanced steel producer.

Hours after its announcement, Esmark reported a fourth-quarter loss of $12.3 million, or $0.76 per share.

AP