U.S. Steel turns down Cleveland-Cliffs bid; still shopping other offers
Despite turning down a $7.3 billion offer, Pittsburgh's United States Steel Corporation confirmed August 13 that it has invited Cleveland-Cliffs Inc.. to participate in its previously announced strategic review process. The company previously disclosed it has commenced a formal review process, with the assistance of outside financial and legal advisors, to evaluate strategic alternatives after receiving multiple unsolicited proposals that ranged from the acquisition of certain production assets to consideration for the whole company.
A deal would've created the only all-American steel company among the top ten steelmakers in the world and one of the world's top four outside of China. It also reportedly would have the backing of the USW (United Steelworkers Union), Cleveland-Cliffs said.
"U.S. Steel had received an unsolicited cash and stock proposal from Cleveland-Cliffs to acquire all of its outstanding shares," the company confirmed in a news release. "As detailed in the letter below, U. S. Steel was unable to properly evaluate the proposal because Cleveland-Cliffs refused to engage in the necessary and customary process to assess valuation and certainty unless U. S. Steel agreed to the economic terms of the proposal in advance."
To provide context to the proposal, Lourenco Goncalves, Chairman, President and Chief Executive Officer of Cleveland-Cliffs said, “On July 28th I approached U.S. Steel’s CEO and Board with a written proposal to acquire U.S. Steel for a substantial premium, valuing the company at $35.00 per share with 50% cash and 50% stock. After two weeks without any substantive engagement from U.S. Steel with respect to the economic terms contained in our compelling proposal, U.S. Steel’s board of directors rejected our proposal, calling it ‘unreasonable.’ As such, I believe it necessary to now make our proposal public to help expedite substantive engagement between our two companies. Although we are now public, I do look forward to continuing to engage with U.S. Steel on a potential transaction, as I am convinced that the value potential and competitiveness to come out of a combination of our two iconic American companies is exceptional.”