Russia’s OAO Severstal has entered into a definitive merger agreement to acquire Esmark Inc. for approximately $775 million. Including the assumption of debt and loans, the value of the deal is approximately $1.25 billion. Esmark has been at the center of a bidding war between Severstal and India’s Essar Steel Holdings. While management previously said Essar had the better offer, the United Steelworkers union was backing a buyout by Severstal. Upon successful completion of the tender offer and merger, Severstal would acquire all of Esmark’s businesses, including Wheeling-Pittsburgh Steel Corp. – which has plants in West Virginia, Ohio and Pennsylvania – and Esmark Steel Services Group.

Severstal, which also gained full ownership of coke plant Mountain State Carbon, has detailed an operating and restructuring plan with a five-year capital investment program designed to derive maximum value from Esmark. Specific operational improvements are to include optimizing EAF production and upgrades to enhance the quality and capacity of the hot-strip mill. Severstal also expects to realize synergies with its current U.S. operations in Dearborn, Mich., and Columbus, Miss.