Esmark rejects Russian firm`s takeover offer

Esmark's announcement came out a couple of days after Essar sweetened the deal by $80 million, raising its bid to $19 per share, or $750 million, from the earlier offer of $17 a share.

The Esmark board termed the Severstal offer, which has the backing of United Steel Workers union (USW), as "inadequate and inferior".

"We continue to invite bidders, including Severstal, to provide a superior proposal to that of Essar," Esmark Chairman and Chief Executive Officer James Bouchard said.

"The board recommended that Esmark's stockholders reject Severstal's offer because of a number of reasons, the most compelling being the price proposed by Essar, which is $2 greater than the price offered by Severstal," Esmark said.

Esmark, meanwhile, said it has filed a grievance against the USW over its opposition to the Essar deal. Under an agreement with the company, the union has the right to come up with an alternative deal in the event of a takeover.

Even before raising its bid, Essar had extended a $110 million loan to Esmark to avoid a potential default. It also announced on Wednesday that it would invest $525 million in capital improvements in Esmark's Ohio and West Virginia plants over the next five years.

Both bidders have also agreed to assume $400 million in debt of Esmark.

Esmark has operations in 20 states, including subsidiary Wheeling-Pitt's plants in West Virginia, Ohio and Pennsylvania and a plant in Greensville County.