US Steel Calls $7.3B Takeover Bid from Rival Cleveland-Cliffs “Unreasonable”

Steelmaker Cleveland-Cliffs offered a buyout proposal for rival US Steel for $7.3 billion that was rejected by the Pittsburgh-based company as being “unreasonable.”

US Steel said it will review its strategic options instead just hours after it received “multiple unsolicited proposals.”

Cleveland-Cliffs was prepared to pay $35 per share, based on $17.50 per share in cash and 1.023 shares of Cleveland-Cliffs stock, which would be a 42% premium to US Steel’s closing price on July 28 when Cliffs privately reached out to the company.

“At this juncture, we cannot determine whether your unsolicited proposal properly reflects the full and fair value of the Company,” U.S. Steel CEO David Burritt wrote in a letter to Cliffs CEO Lourenco Goncalves. “For all of the above reasons, the Board has no choice but to reject your unreasonable proposal.”

The company said Cliffs refused to sign a nondisclosure agreement that would allow US Steel to do the due diligence required to assess if the proposal is fair to its shareholders.

Ohio-based Cliffs said it felt “compelled to make its offer publicly known for the direct benefit of all of US Steel’s stockholders and make it known that Cliffs stands ready to engage on this offer immediately.”

A merger between the two companies would create a global steelmaking giant and help it become a bigger competitor in an industry largely dominated by China.

Cliffs said its offer received the support of the United Steelworkers union, the largest steel industry union in North America. Cliffs said it also prepared debt financing for the proposed deal from several banks.

Cliffs has been among the most active in the steel industry in acquiring companies in recent years. In 2020, it purchased AK Steel Holding Corp. and the US business of steelmaker ArcelorMittal.