Russia's largest steelmaker, OAO Severstal, boosted its takeover offer for U.S. producer Esmark Inc. by 13 percent to $775 million and entered a merger agreement with the target company.

Russia-based Severstal said in a statement that investors will now receive $19.25 for each Esmark share, whereas they use to get $17 per share earlier.   

A separate statement said that shareholders will be recommended by the Esmark’s Board of Directors to tender their shares.
The offer has a total equity value of approximately $775 million, said Severstal.  

It has also agreed to purchase Esmark's aggregate $110 million term loan facilities from India's Essar Steel Holdings Ltd, which had also targeted Esmark for takeover.

The offer, which tops a $19-a-share bid from India's Essar Steel Holdings Ltd., will expire at midnight July 18.  

Severstal has the backing of Esmark's largest union along with its largest shareholder, Franklin Mutual Adviser LLC.
Severstal spent $950 million this year for ArcelorMittal's Sparrows Point steel plant near Baltimore and WCI Steel Inc.