Russian company makes offer for Wheeling-based Esmark Inc.

The company that’s buying WCI Steel makes a bid for a West Virginia steelmaker.

MORGANTOWN, W.Va. (AP) — Russian metals and mining company OAO Severstal offered Tuesday to buy Esmark Inc. for $17 per share in cash, claiming it has the critical support of the United Steelworkers union.

The union late last week said it would oppose another $17 per share, or $670 million, buyout offer from India’s Essar Steel Holdings, contending Wheeling-based Esmark accepted the deal without giving the USW adequate notice or an opportunity 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. Severstal on Friday announced plays to buy Warren steelmaker WCI Steel Inc. in a in a $140 million deal.

Esmark shares shot up 15.6 percent, or $2.40, to $17.80 on the Nasdaq Stock Market.

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.”

Mason said he’s confident Severstal’s proposal will be deemed “much more compelling” than Essar’s. Severstal, he said, can close the deal within 40 days of entering an agreement to combine.

Esmark spokesman Bill Keegan said the company has received an 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.