Severstal eyes Esmark, claims union support
Staff, wire report
POSTED: May 21, 2008
Fact Box
Salaried cuts 'speculation'n Any talk of salaried worker cutbacks in the wake of OAO Severstal’s planned acquisition of WCI Steel Inc. is ‘‘strictly speculation,’’ a WCI spokeswoman said Tuesday. ‘‘Any change in the work force will be the decision of Severstal,’’ said Bette Kovach, noting WCI still owns the business until a sale can be completed as scheduled sometime by Sept. 30.
Severstal spokesman Michael Henson also labeled any talk of cutbacks in salaried workers as speculation and rumor.
WCI had 225 salaried workers as of last November. It employs about 1,100 hourly workers.
The union late last week said it would oppose an identical $670 million cash buyout offer from India’s Essar Steel Holdings, contending that Wheeling, W.Va.-based Esmark — formerly Wheeling-Pittsburgh Steel Corp. — accepted the deal without giving the USW adequate notice or a chance to put forth an alternative.
The union’s contract, which expires Sept. 1, gives it the right to reject any deal that changes control of the company, which has operations in eastern Ohio. A USW leader did not immediately respond to a request for comment Tuesday.
Severstal contends it is best positioned to create value for Esmark and said it has a five-year capital improvement plan.
Esmark shares shot up 16.9 percent, or $2.60, to $18 on the Nasdaq Stock Market Tuesday.
While he hopes to work with Esmark and its board of directors, Severstal Chief Operating Officer Gregory Mason said ‘‘it is critical to give Esmark’s stockholders a chance to decide for themselves.’’
Severstal released a copy of its offer letter, arguing it is ‘‘best suited to unlock the potential of Esmark’s current operations’’ by merging them with Severstal plants in Dearborn, Mich., Sparrows Point, Md., and Columbus, Miss.
Supplying slab steel from Sparrows Point, for example, could increase the use of Esmark’s hot strip mill, Severstal said. The purchase of WCI in Warren — a $370 million cash and debt deal announced Friday — is still awaiting regulatory approvals but could create further opportunities.
Esmark spokesman Bill Keegan said the company has received the offer letter and is reviewing the proposal.
Both companies have offered to pay $17 per share and assume $400 million in debt, putting the total value of either deal at $1.1 billion.
However, Keegan said the Esmark board of directors, which includes two union representatives, unanimously endorsed the Essar offer.
Member Comments
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BeerSlave
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05-22-08 3:44 PM
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VoiceOfReason, I hear that. With as much $$ as these Russian's have... and given how many companies they are buying out... it looks as though they could just as easily shut the mill as fast as they bought it... which by the way was very cheap..
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VoiceOfReason
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05-21-08 1:59 PM
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Don't fight the battle too hard Union members - in the end you'll lose the war. This is more evidence that WCI and Warren / Youngstown need to make every effort to grow the local operations, least it transition elsewhere.
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