In two almost simultaneous statements, Severstal matched Essar's 17-dollar per share offer for Esmark, while the board and top management of the target company endorsed the Indian bid despite the opposition of United Steelworkers (USW) - the umbrella organisation of steel workers union.
While calling its bid "superior" to that of Essar, the Russian firm also cited full support of USW and expressed its disappointment over the agreement between Essar and Esmark.
Esmark, at the same time, termed Essar as a "fine company" with potential to become a leading low-cost steel producer in North America.
While asking Esmark to make public "actual acquisition agreements" entered into with Essar, Severstal said its offer "clearly constitutes a superior proposal under the publicly available terms of the Essar Steel proposal".
Severstal's rival bid follows an agreement announced by Esmark on April 30 to be acquired by Essar Steel and another announcement by USW on May 16 rejecting this deal.
The union has demanded Esmark to repudiate the deal with Essar, saying it was in violation of USW's "right to bid" provisions in its collective bargaining agreement with Esmark.
Esmark would have to pay $20.5 million as termination fee and another $2 million towards "out-of-pocket" expenses to Essar if the deal falls apart. Interestingly, Severstal had also rivaled unsuccessfully NRI billionaire Lakshmi Mittal's multi-billion dollar takeover bid for European steel giant Arcelor.