• US Steel Corporation (NYSE: X) stock rallied more than 35% on August 14th after rejecting a takeover bid from Ohio-based Cleveland-Cliffs (NYSE: CLF).
• Founded in 1901, US Steel is a top steel supplier to automobile makers, appliance sector, and construction companies.
• Esmark, a Pennsylvania-based industrial conglomerate with huge exposure to the steel industry, has offered to acquire US Steel’s all issued and outstanding shares for $7.8 billion — more than Cleveland-Cliffs’ bid.
US Steel Rejects Takeover Bid
The US Steel Corporation (NYSE: X) stock rally of over 35% to $31.08 per share came after the company rejected a takeover bid from Ohio-based Cleveland-Cliffs (NYSE: CLF), which had offered to acquire US Steel at around $7.3 billion — 45% higher than its Aug 11 closing valuation.
About US Steel
US Steel has been dominating the industry since 1901 as a top steel supplier to automobile makers , appliance sector, and construction companies. Recently, other steel businesses have expressed interest in acquiring its mills and iron ore mines but the company considers Cleveland-Cliffs’ offer as “unreasonable” according to CEO David Burritt.
Cleveland Cliffs Confident of Acquisition
Cleveland Cliffs’ CEO Lourenco Goncalves stated that their offer would succeed due to endorsement from United Steelworkers Union — who have collective bargaining agreement with US Steel — even if the company views it as unreasonable. On this news, CLF’s stock price jumped over 8%.
Esmark Rivals Cliffs’ Offer
As suspense grows over the deal, Esmark offered to acquire all issued and outstanding shares of US Steel for $7.8 billion — higher than Cleveland-Cliffs’ bid amount. CEO James Bouchard said “It should be in American hands”. Despite demand for steel slowing down in recent years, steelmakers continue pouring money into new investments plans.
Conclusion
The acquisition offers made by various companies indicate a strong interest in investing in the American steel industry despite declining demand and shipments from U