New York (AFP) – U.S. Steel said Sunday it had rejected a $7.3 billion takeover bid from rival Cleveland-Cliffs and was reviewing “strategic alternatives” after receiving several unsolicited offers.
Pittsburgh-based US Steel said it declined the offer because Cleveland Cliff was pushing it to accept the terms without allowing it to conduct proper due diligence.
“At this point, we cannot determine whether your unsolicited proposal correctly reflects the full and fair value of the Company. For all of the above reasons, the Board of Directors has no choice but to reject your unreasonable proposal,” US Steel CEO David Burritt said in a statement. A letter, released Sunday, to Cleveland CEO Cliffs Lourenco Goncalves.
Cleveland-Cliffs announced earlier Sunday that it has made an offer for US Steel of $7.3 billion, based on $17.50 a share in cash and 1,023 shares of Cliffs stock. The value of the offer was $35 a share, Cleveland-Cliffs said, a premium to US Steel’s closing stock price of $22.72 on Friday. The company said it decided to disclose the private offer after it was rejected by US Steel.
Burritt had revealed in an earlier statement that the company had received numerous unsolicited offers and had launched a “comprehensive and comprehensive review of strategic alternatives.” US Steel, which said it expected to receive more offers, said there was no guarantee any deal would emerge from the review process.
Porritt said the offerings are “an affirmation of US Steel’s strategy” for transformation, including expanding its steelmaking capabilities in electric arc furnaces and finishing.
Cleveland-Cliffs said its proposal, first submitted on July 28, would create a company that would be among the 10 largest steelmakers in the world and one of the four largest outside of China. Cleveland-Cliffs CEO Lourenco Goncalves said in a statement that the proposal would create “a cheaper, more innovative and stronger domestic resource for our customers,” and that he was willing to participate in it despite US Steel’s refusal.
Goncalves said the company’s bid has the support of the United Steelworkers union, which has 14,000 members in Cleveland-Cliffs and 11,000 members in US Steel. In a letter of support posted on the company’s website, the union said the company was “in the best position to ensure US manufacturing remains strong in this country” and commended the company for not cutting union jobs when it acquired AK Steel in 2019 and ArcelorMittal in 2020.
Cleveland-Cliffs is the largest producer of steel and flat iron in North America. US Steel has been a symbol of manufacturing since it was founded in 1901 by JP Morgan, Andrew Carnegie and others, though its share price has suffered in recent years with the volatility of steel prices.