United States Steel Corp began a formal review of its strategic options on Sundayafter rejecting a takeover offer from rival steelmaker Cleveland-Cliffs Inc. The unsolicited offer from Ohio-based Cliffs values US Steel at about $7.3bn, which represents a 43% premium over its closing price on Friday. This caused an exponential rise in Wall Street 36%.
Thus, the yield from US Steel It climbed almost 45% on the local stock market, driven not only by its original action but also by the strong rise of the CCL dollar to 654.95, with a rise of almost 9% in a single day after the STEP.
US Steel rejected a takeover offer as “unreasonable” and instead announced a formal review process, saying the company had received multiple offers for parts or all of its business.
What happened was that Cliffs claimed that he had offered to pay $17.50 in cash and 1,023 shares of his own for each US Steel share, which is a 42% premium over the closing price of US Steel shares on December 28. Julywhen Cliffs contacted the company privately.
A merger between Cliffs, which currently has a market capitalization of about $7.5bn, and US Steel would create a global steel giant. and it would help it better compete in a sector largely dominated by China.
US Steel, which has been raising prices to offset the impact of higher costs related to raw materials and energy, posted strong demand for its steel products, helping it beat second-quarter profit estimates.
Cliffs has been one of the most acquisitive companies in the sector, having bought AK Steel Holding Corp in 2020 and taking over the US business of steelmaker ArcelorMittal that same year.
“I am convinced that the value potential and competitiveness that would come from a combination of our two iconic US companies is exceptional,” said Lourenco Goncalves, Cliffs’ CEO.
Cliffs said his takeover bid for US Steel had received the support of the United Steelworkers union, the largest union in the US steel industry. He also claimed that he had secured debt financing from various banks for the proposed deal. The company used Moelis & Company LLC, Wells Fargo, JPMorgan and UBS as financial advisers, and Davis Polk & Wardwell LLP as legal advisers.
In a subsequent statement, US Steel confirmed that it had received an offer from Cliffs and other interested parties.
“US Steel was unable to properly evaluate the proposal because Cleveland-Cliffs refused to participate in the necessary and customary process to evaluate valuation and certainty unless US Steel agreed to the economic terms of the proposal in advance”US Steel said.
US Steel retained Barclays Capital and Goldman Sachs Group as financial advisors, and Milbank LLP and Wachtell, Lipton, Rosen & Katz as legal advisors.
Source: Ambito
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