U.S. Steel Dismisses Takeover Offer from Cleveland-Cliffs and Commences Strategic Evaluation

**United States Steel Rejects Buyout Offer from Cleveland-Cliffs**

Ohio-based Cleveland-Cliffs Inc. made an offer to acquire United States Steel Corp., but it was rejected by the latter as “unreasonable.” United States Steel, in response, has begun a formal review of strategic alternatives after receiving multiple unsolicited proposals.

**Background on Proposed Deal and Offer**

Cleveland-Cliffs proposed a deal in which it would pay $17.50 in cash and 1.023 of its shares for each United States Steel share. This offer implies a value of $32.53 per share, which represents a 43% premium to United States Steel’s closing price. The deal would have created one of the world’s largest steelmakers. Despite the rejection, Cleveland-Cliffs remains open to engaging with United States Steel on the offer.

**Cleveland-Cliffs’ Acquisition History**

Cleveland-Cliffs has been an active dealmaker in the US steel industry in recent years. The company, formerly focused on iron ore production, acquired AK Steel Holding Corp. in 2019 and ArcelorMittal’s US operations in 2020. These acquisitions positioned Cleveland-Cliffs as the dominant operator of traditional blast furnaces in the US and gave it a significant presence in the profitable business of steelmaking for the automobile industry. However, the company still lacks a footprint in electric arc furnaces, which remelt scrap to produce steel.

**United States Steel’s Transition and Leadership**

United States Steel has undergone a significant transition since Chief Executive Officer David B. Burritt took over in 2017. Under his leadership, the company shifted its manufacturing process to focus on furnaces that remelt scrap into steel rather than using traditional iron ore. This strategic shift has been successful, evidenced by the doubling of the company’s shares since the end of 2019. Additionally, United States Steel acquired Big River Steel in Arkansas and plans to invest an additional $3 billion in the operation by 2024 to double its capacity.

**Strategic Review and Financial Advisers**

United States Steel has enlisted Barclays Capital and Goldman Sachs as financial advisers for its ongoing strategic review. The company has not set a deadline for the completion of the review, and it may not result in a transaction or any other strategic outcome, according to the company’s statement.

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