Cleveland-Cliffs is responding to US Steel’s rejection of its $7.3 billion buyout proposal made last week, bringing the private offering into the public’s eye and reiterating that the company has received exclusive support from the United Steel Workers (USW) labour union.
“I believe it necessary to now make our proposal public to help expedite substantive engagement between our two companies,” says Lourenco Goncalves, Cleveland-Cliffs’ chief executive and president.
USW has a collective bargaining agreement with US Steel that allows the union to counter any takeover offer with a competing offer of its own. However, the union has reiterated in a joint announcement with Cleveland-Cliffs that it will not stand in the way of a Cleveland-Cliffs bid. Kallanish notes that the USW has explicitly stated that it will only endorse a proposal made by the Cleveland, Ohio-based flat steel maker.
In its most recent announcement, Cleveland-Cliffs notes that its $7.3 billion represents a 43% premium above US Steel’s current market price, 1% higher than its initial offering, which was 42% above US Steel’s market price near the end of July.
“With this transaction we will create the only American member of the top ten steel companies in the world, joining a select group of just three other companies outside of China – one European, one Japanese and one Korean. We believe that having Cleveland-Cliffs as a world-class, internationally competitive steel company is critical for our country to retain its economic leadership and to regain its manufacturing independence,” Goncalves explains.
Zach Johnson USA
