Russia's OAO Severstal has completed its acquisition of Esmark Inc. for $775 million, plus the assumption of debt and loans, the companies announced Tuesday. That puts the total value of the deal at around $1.25 billion.

When its $19.25 per share tender offer expired Monday, Severstal had claimed 38,767,487 Esmark shares, or 94.2 percent of the total. Esmark's stock will no longer be traded, and it is now a wholly owned subsidiary called Severstal Wheeling Holding Co.

Esmark's subsidiaries are also being renamed: West Virginia's Wheeling-Pittsburgh Steel Corp. will become Severstal Wheeling Inc., while Illinois-based Esmark Steel Services Group will become Northern Steel Group Inc.

Severstal already had a partnership with Wheeling-Pitt, a coke plant in Follansbee called Mountain State Carbon. By assuming full ownership, it ensures a long-term supply of coke, a key raw material in steelmaking.

The United Steelworkers union backed Severstal's offer over one from India's Essar Steel Holdings.

"We are happy that Severstal is closing and confident that we will reach a fair contract for our members," said Dave McCall, director of USW District 1 in Columbus, Ohio.

Severstal has pledged to invest in Wheeling-Pitt's hot strip mill, which Chief Operating Officer Gregory Mason said last month should be running at full capacity, possibly with slabs brought in from Severstal's Sparrows Point mill near Baltimore. He also said Wheeling-Pitt's $115 million electric furnace, which is less than five years old, has never been taken to its full capacity of nearly 2.5 million tons a year.

While Mason has not specified where Severstal will spend a promised $250 million in capital improvements, he has said the company is committed to making Wheeling-Pitt's operations sustainable.

The acquisition is a major step in the Russian producer's North American growth strategy. While Esmark brings "considerable stand-alone growth potential," it also helps Severstal diversify in an industry that continues to consolidate, Mason said Tuesday.

"We are now poised to be a leading producer and supplier of domestically produced steel to a region that has a consistent demand for high quality products," he said.

Esmark executives James and Craig Bouchard will not be part of the new company. They walk away from the deal with a combined $9.8 million.

The brothers won control of Wheeling-Pitt in a proxy battle two years ago and officially acquired it in November 2007. Esmark reported annual sales of $825.5 million in 2007 and posted a first-quarter loss of $15.8 million.

Esmark has operations in 20 states, including Wheeling-Pitt plants in West Virginia, Ohio and Pennsylvania, and a plant in Greensville County, Va.

Severstal reported 2007 sales of $15.2 billion and a profit of $1.97 billion. It produced 17.5 million tons of raw steel in 2007 and has operations in Europe and North America, including U.S. plants in Dearborn, Mich., Columbus, Miss., and Warren, Ohio.