Esmark Inc. and Duferco U.S. Investment Corp. have formed a consortium to purchase the assets of Winner Steel, based in Sharon, Pa. Terms of the proposed acquisition bid were not disclosed.

The consortium, made up of Esmark and Duferco U.S. Investment—a wholly-owned subsidiary of Steel Invest & Finance SA (Luxembourg), a 50/50 joint venture between Russia’s Novolipetsk Steel (NLMK) and Switzerland-based Duferco Group—has entered into a letter of intent with Winner Steel to purchase Winner’s galvanized steel production facilities.

With operations are located on a single site in Sharon, Pa., Winner Steel is one of the largest independent galvanized steel producers in the United States, with total production of approximately 800,000 million tons in 2006. Its three galvanizing lines have combined annual capacity of around 1.2 million tons. The company’s galvanized steel is used mainly in the construction, appliances and automotive industries.

“The addition of Winner Steel’s galvanized steel production assets, combined with Duferco’s neighboring Farrell facility, will allow Esmark to bolster its converter operations, service center network and pre-painted division and provide customers with a value-added, just-in-time solution, ” commented James P. Bouchard, Chairman and CEO of Esmark. “The combination of our international partners’ resources and expertise and Esmark’s low-cost service center model will help us expand on our growth strategy in the U.S. marketplace.”

Winner Steel is located close to Duferco’s Farrell facility, which is already part of the NLMK-Duferco joint venture, and is one of the primary suppliers of cold-rolled steel to Winner Steel and the galvanizing segment of the industry.

“We welcome this development in the business of our joint venture with Duferco Group,” said Alexey Lapshin, NLMK President and the Board Member of Steel Invest and Finance SA. It will provide for an increase in value-added products and further expansion into the large North American market. We are delighted to have Esmark, one of the most dynamic companies in the U.S. steel industry, as our partner in this project.”

“Being located just next to our Farrell facility in Sharon, Winner Steel is a logical component of our North American growth strategy,” said Benedict Sciortino, Director of Duferco Group and a Board Member of Steel Invest and Finance SA. “The acquisition is likely to create substantial synergies by ensuring a stable supply of cold-rolled material to Winner Steel and by increasing the downstream exposure of the NLMK-Duferco joint venture. We are delighted to work together with Esmark on this transaction and are hopeful that it will lead to successful joint projects in the future.”

The Winner Steel transaction, which is subject to the negotiation and execution of a definitive agreement and regulatory approvals, is expected to be completed in the second quarter of 2007.

Headquartered in Chicago and founded by the Bouchard Group, Esmark is a steel services family of companies. Esmark’s mission is to establish the benchmark standards for strategic consolidation, operating efficiency and management excellence in the steel sector.

Novolipetsk Steel (NLMK) is one of the world’s leading steel companies and one of the three largest flat steel producers in Russia, producing over 9 million tonnes of crude steel annually. NLMK’s production facilities are among the most technologically advanced in Russia, producing flat steel products in a variety of grades and sizes. NLMK is one of the world’s most profitable steel companies with EBITDA margin over 40%. The company’s traditional strengths include vertical integration into raw materials, world class assets with a competitive cost of production, proximity to mature and developing markets where the company has strong positions, sound financial performance, professional and experienced management team.

Duferco Group is an international steel production, processing and trading group with headquarters in Lugano, Switzerland. Duferco had revenues in excess of USD 7 billion in 2005, and is one of the world’s largest companies engaged in the worldwide production, distribution and trade of all types of steel products, including raw materials used in steel making processes. Duferco has trading and production activities in more then 40 countries. It operates steelmaking and processing plants in Western and Eastern Europe, USA, South Africa and Central America.

NLMK and Duferco Group formed a joint venture through Steel Invest & Finance SA (Luxembourg), a limited liability company (société anonyme) established under the laws of Luxembourg in which they both hold a 50% interest. The joint venture holds 100% or majority interests in 23 companies including one steelmaking plant and five steel rolling facilities with total finished steel output of 4.5 million tonnes in 2006 as well as a network of steel service centers.

Winner Steel is one of the largest independent galvanized steel producers in the United States, with operations located on a single site in Pennsylvania. Winner Steel’s three galvanizing lines have a combined annual capacity of around 1.2 million tons.