US Steel Declines $7.3 Billion Takeover Offer from Rival Cleveland-Cliffs
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US Steel Declines $7.3 Billion Takeover Offer from Rival Cleveland-Cliffs

On Sunday, U.S. Steel turned down a $7.3 billion takeover proposal from its competitor, Cleveland-Cliffs, North America’s primary producer of flat-rolled steel.

This decision came shortly after U.S. Steel announced that it had enlisted financial advisors to assess the various acquisition offers aimed at the company.

Cleveland-Cliffs stated that it offered to acquire U.S. Steel for $35 per share in cash and stock, a 43 percent premium over U.S. Steel’s Friday closing price of $22.72 per share, but the offer was rejected. 

U.S. Steel was worth $5 billion as of Friday’s closing price. U.S. Steel stated earlier on Sunday that it was evaluating strategic alternatives and had received multiple unsolicited bids ranging from the possible acquisition of the entire company to specific assets. 

Lourenco Goncalves, the chief executive officer of Cleveland-Cliffs, said in a statement that he hoped to continue talks with U.S. Steel regarding a potential transaction. 

U.S. Steel declined to comment on the offer on Sunday. 

Ohip-based Cleaveland-Cliffs has been a major steel acquirer in North America in recent years. In 2020, it paid $1.4 billion in shares and cash to acquire the majority of American steelmaking operations from Luxembourg-based ArcelorMittal, the second-largest steelmaker in the world.

A year earlier, Cleveland-Cliffs acquired US steel producer AK Steel for $1.1bn.

Cleveland-Cliffs has received backing from the United Steelworkers union for this acquisition. The union has explicitly stated that it will only endorse Cleveland-Cliffs and not any other entity for the transaction.

U.S. Steel, based in Pittsburgh and founded in 1901, has been a significant symbol of American manufacturing. To establish its fundamental framework, JP Morgan purchased it from Carnegie and merged it with a rival.

U.S. Steel’s Enduring Legacy, Uphill Challenges, and Strategic Sale Plan

On Sunday, U.S. Steel turned down a $7.3 billion takeover proposal from its competitor, Cleveland-Cliffs, North America’s primary producer of flat-rolled steel. (Photo by Getty Images)

U.S. Steel’s impact is notable as it played a role in constructing iconic structures like Chicago’s Willis Tower and the United Nations Building in New York. Additionally, the company supplied substantial amounts of steel to the U.S. military during World War II.

Bur US Steel has struggled over the past several years, and its stock price has diverged from Cleveland-Cliffs’s. U.S. Steel’s share price is 24 percent lower than five years ago and trails an S&P materials benchmark index. The share price of Cleveland-Cliffs is 42% higher than it was five years ago. 

According to VerityData, US Steel disclosed in its July 28 quarterly financial report that CEO David Burritt adopted a stock sale plan on June 6 that will only be implemented if shares trade for $49.87.

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Source: FINANCIAL TIMES

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