Heat Treat Industry News

December 15, 2009

Severstal Said to Be in Talks to Sell Steel Service Centers Share Business

Dec. 15 (Bloomberg) -- OAO Severstal, Russia’s largest steelmaker, is in talks with two potential strategic buyers for its U.S. steel service centers, a person familiar with the process said.

Severstal received a total of five proposals from groups interested in buying the centers, two of which will proceed in the final round of due diligence that will occur in January and February, the person said, without identifying any of the five. Bette Kovach, a spokeswoman for Severstal in the U.S., declined to comment on the process.

Severstal, based in Cherepovets, Russia, purchased the service centers that are collectively called Northern Steel Group Inc. when it bought of all of Esmark Inc.’s steel assets for about $775 million last year. Esmark offered to repurchase the centers from Severstal for $110 million in November and didn’t make it past the first round of bidding, Craig Bouchard, vice chairman of closely held Esmark, said in an e-mail today.

“We submitted the bid in November and were told they would like to continue their search for the best possible suitor,” Bouchard said. “We maintain a good relationship with Severstal and know they will call us if they feel it is appropriate.”

The group for sale includes factories in Illinois, Indiana, Ohio and Missouri that process steel into finished products.

Chicago-based Esmark re-entered the steel-processing business last month with the purchase of Amtex Steel Inc. in University Park, Illinois, for $10 million.

Last Updated: December 15, 2009 16:28 EST

By Edmond Lococo - Dec. 15 (Bloomberg)

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