Russian metals and mining company OAO Severstal offered Tuesday to buy Esmark Inc. for $17 per share in cash, claiming it has the critical support of the United Steelworkers union.

The union late last week said it would oppose an identical $670 million cash buyout offer from India's Essar Steel Holdings, contending that Wheeling-based Esmark accepted the deal without giving the USW adequate notice or a chance to put forth an alternative.

The union's contract, which expires Sept. 1, gives it the right to reject any deal that changes control of the company. A USW leader did not immediately respond to a request for comment Tuesday.

Severstal contends it is best positioned to create value for Esmark and said it has a five-year capital improvement plan.

Esmark shares shot up 16.9 percent, or $2.60, to $18 on the Nasdaq Stock Market.

While he hopes to work with Esmark and its board of directors, Severstal Chief Operating Officer Gregory Mason said "it is critical to give Esmark's stockholders a chance to decide for themselves."

Mason said he's confident Severstal's proposal will be deemed "much more compelling" than Essar's. Severstal, he said, can close the deal within 40 days of entering a merger agreement.

Severstal released a copy of its offer letter, arguing it is "best suited to unlock the potential of Esmark's current operations" by merging them with Severstal plants in Dearborn, Mich., Sparrows Point, Md., and Columbus, Miss.

Supplying slab steel from Sparrows Point, for example, could increase the use of Esmark's hot strip mill, Severstal said. The purchase of WCI in Warren, Ohio, is still awaiting regulatory approvals but could create further synergies.

Esmark spokesman Bill Keegan said the company has received the offer letter and is reviewing the proposal.

Both companies have offered to pay $17 per share and assume $400 million in debt, putting the total value of either deal at $1.1 billion.

However, Keegan said the Esmark board of directors, which includes two union representatives, unanimously endorsed the Essar offer. Continued...