ArcelorMittal today cancelled plans to sell its Sparrows Point mill near Baltimore to Esmark and other investors, citing the acquirer's inability to finance the $1.35 billion transaction.

The decision is a major blow to Esmark, which last month merged with twice-bankrupt Wheeling-Pittsburgh. Both companies were investors in E2, the joint venture formed to acquire the Sparrows Point plant. The mill was supposed to provide low-cost slabs to Wheeling-Pitt as a way to reverse $158 million in losses the West Virginia steelmaker suffered in the first nine months of this year.

Shares of Esmark continued sliding today, trading at $10.32, down $1.60, shortly before 11 a.m. They have fallen 47 percent since the merger with Wheeling-Pitt was approved by shareholders Nov. 27.

Union leaders at Esmark mills have sent letters to members warning of layoffs next year. United Steelworkers Local 1190 President Ken Aspenleiter, who represents workers at the Steubenville plant, told Associated Press that about 300 jobs could be affected.

E2 announced plans to acquire the Baltimore plant on Aug. 2 and failed to meet two deadlines for completing the transaction. ArcelorMittal, the world's largest steel producer, is under U.S. Justice Department orders to sell the Baltimore mill for antitrust reasons. Joseph Krauss, the court-appointed trustee overseeing the divestiture, said he will seek new bids with the help of an investment banker.