Esmark is a steel production and distribution company with a capacity of 2.4 million tonnes per annum.
Esmark also said it has signed a commitment letter with Essar for a $110 million (about Rs 440 crore) term loan, expected to be funded by the middle of May. The money will be used to refinance the existing term loan and provide additional liquidity.
The deal now enters a 52-day "right to bid" period required in the collective bargaining agreement with United Steelworkers, which has the right to reject any deal that changes control of twice-bankrupt Wheeling-Pitt. Esmark had earlier bought Wheeling-Pitt.
Essar has been expanding. Last year, it bought a Canadian steel plant for $1.6 billion (about Rs 6,400 crore) and said it plans to build a second $1.6 billion mill on northern Minnesota's iron range. Essar supplies steel to India, Asia, Canada, the US and West Asia.
Commenting on the deal, Shashi Ruia, chairman, Essar Global, the holding company of Essar Steel, said, "This is one more step in realising our global steel vision of having world class, low-cost assets with a global footprint.
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"Having acquired Algoma and Minnesota Steel last year, the acquisition of Esmark provides us with an excellent platform for the Canadian and North American markets. With this acquisition and projects under implementation in Trinidad and Tobago, Essar Steel Holdings will have a flat steel production capacity of 10 million tonnes in the Americas."
With this acquisition, Essar will have around 7 million tonnes of steel making capacity in the US and Canada, making it a significant player in those markets.
The offer was unanimously accepted by the Esmark board and is subject to customary approvals, including those of the US government and United Steel Workers.