Updated June 27, 2008

   Russia’s Severstal that has raised its offer price by 13% to $775 million becomes the buyer of the American steel producer – Esmark. The Russian company competitor – the Indian Essar – gave up a further fight. Experts mark Severstal has paid double on a ton of Esmark products basis as compared to its previous American purchases and they do not expect a positive effect from a purchase in the nearest future.

   On June, 26 OJSC Severstal declared about binding agreement signing concerning purchase of the American Esmark Inc steel company. To reach the agreement which has become the result of long fight with the Indian Essar Steel Holdings Limited for control over Esmark, Severstal has had to raise the offer by 13%, from $17 to $19,25 per stock. Thus, Severstal pays $775 million for 100% of Esmark or $1,25 billion including its debt. The same day Essar withdrew the offer alluding to serious deal support with Severstal on the part of workers trade union of the US steel industry – United Steelworkers (USW). Esmark directors’ board has already recommended its stockholders to sell their stocks to Severstal by July, 18.

   Esmark president Craig Bouchard said that in the company were satisfied with the long fight ending for the company purchase. "Severstal has been holding talks about Esmark purchase honestly and professionally", he marked. Thus, Mr. Bouchard asserts that Esmark recovers positive profitability in the current quarter already, therefore the Russian buyer "inherits wonderful assets collection that have a synergy with the other North-American assets it has purchased before". USW representative Toni Montana underlined that initially trade unions had supported the Russian company ready to sign collective labor agreement with Esmark, as well as plans to invest in the company works.

   Severstal International division head and deputy director general of OJSC Severstal production Gregory Mason says that at $19,25 price per stock the purchase is favorable for the company stockholders "both from the viewpoint of mid-term and long-term return on investments and from the strategic viewpoint". Mr. Mason added that within next five years Severstal would invest around $250 million in Esmark

   Despite of this, on June, 26 Esmark quotations have gone by 6,6% down in relation to the previous day closing price to $19,12 point per stock, and that corresponds all company capitalization – $755,44 million. Considering this, analysts are sure that the majority of the American company stockholders will approve the offer. However, Dmitry Baranov from Finam Investment Company marks the significant overpayment on Severstal part. "This is the most expensive Severstal purchase in the USA for the last year", an expert explains. "In fact, per Esmark capacity ton the company offers $531 against $225 at Sparrows Point purchase and $268 within WCI purchase". "It is obvious that one should not expect a positive effect from the purchase in the mid-term perspective", consents Kapital Investment Group analyst Pavel Shelekhov.