U.S. Steel Rejects $7.3 Billion Takeover Bid
U.S. Steel rejects a $7.3 billion takeover bid from Cleveland-Cliffs, causing speculation on the future of the steel industry.
Cleveland-Cliffs Inc., an Ohio-based steel producer, has had its unsolicited takeover bid worth $7.3 billion rejected by U.S. Steel. This bid would have significantly reshaped the steel industry in America.
The offer from Cleveland-Cliffs included a value of $17.50 in cash and 1.023 shares of Cliffs stock per share of U.S. Steel. This implied a valuation of $35 per share, providing a 43% premium based on Friday's closing stock price and valuing the company at approximately $7.25 billion.
However, U.S. Steel's board dismissed the offer as "unreasonable" and refused to consider it further. Cliffs CEO Lourenco Goncalves expressed his disappointment with the rejection but believed it was necessary to make the proposal public in order to encourage meaningful discussions between the two companies. Goncalves also highlighted that the proposal had the support of the United Steelworkers union.
In response to the rejection, U.S. Steel announced that its board would evaluate "strategic alternatives" for the company following several acquisition offers. CEO David B. Burritt emphasized their commitment to maximizing value for stockholders and acknowledged the interest shown through the unsolicited proposals as evidence of U.S. Steel's successful strategy and execution.
Regarding Cleveland-Cliffs' offer, U.S. Steel has not commented at this time.
As of Friday's data, U.S. Steel had a market capitalization of $5.07 billion, with its shares down 9.3% year-to-date. Cleveland-Cliffs' shares also experienced a decline of 8.8% this year, and the company had a market capitalization of $7.47 billion as of Friday.