Cleveland-Cliffs continues push to buy U.S. Steel as another company withdraws offer – Twin Cities
DULUTH, Minn. — Almost two weeks since U.S. Steel rejected an offer by rival iron miner and steelmaker Cleveland-Cliffs, few companies have stepped up to try to buy the Pittsburgh-based company, which said it is entertaining other offers.
Although it was rejected, Cliffs’ offer of $7.3 billion in cash has garnered the support of the United Steelworkers union, which represents employees at both companies.
But Reuters reported that Luxembourg-based ArcelorMittal is considering buying U.S. Steel, too.
If ArcelorMittal’s bid is successful, it would mark its return to a region it largely stepped away from when Cliffs bought ArcelorMittal’s U.S. operations — including Virginia’s Minorca Mine, its stake in Hibbing Taconite and the Burns Harbor steelmaking facility in Indiana — in 2020.
A third company, Pittsburgh-based Esmark, withdrew its cash offer to buy U.S. Steel for $35 per share, or $7.8 billion, in light of the United Steelworkers backing the Cliffs offer.
“The U.S. Steel board must go through their process that they previously announced. We wish them the best during this process, and we will evaluate any opportunities in connection with that process, subject to support from the USW,” Esmark Chairman and CEO Jim Bouchard said in a news release Wednesday.
U.S. Steel and Cleveland-based Cliffs are the two companies behind Minnesota’s six operating iron ore mines and pellet processing plants.
Steelworkers backing Cliffs
The United Steelworkers’ contract with U.S. Steel allows the union to make an offer for the company if it is for sale. And on Aug. 17, the Steelworkers transferred that right to bid to Cliffs.
In a news release announcing the transfer, Cliffs said the contract requires any sale of U.S. Steel to have the support of the Steelworkers.
However, in a Tuesday letter to employees, U.S. Steel disputed that the contract allowed the union to block a sale of the company.
“But, let me be clear — the (basic labor agreement) does not grant the USW, or any party it assigns its right to, the right to prevent a potential transaction — with any party — that our Board decides is in the best interest of court stockholders,” U.S. Steel CEO David Burritt said in the letter.
Burritt said any potential purchaser of U.S. Steel must recognize the union and honor its existing contract.
Cliffs also said the preferred option requires U.S. Steel to disclose any offers made by other companies, according to SEC filings.
Antitrust hurdle?
If Cliffs is successful in buying U.S. Steel, it would create a combined company that would leave Minnesota — and the country — with just one company in charge of all currently operating iron ore mining and processing facilities.
And on the steelmaking side of things, it would further consolidate the relatively small number of domestic steelmakers.
But Tony Barrett, professor emeritus of economics at the College of St. Scholastica, doesn’t think that would be enough for regulators in the Biden administration to block the deal over antitrust concerns.
“In a lot of ways, this makes sense and I think it’d be good for our region. The concern is antitrust. Now, in terms of iron ore production, that’s a concern, I guess. But I would not see it as a deal stopper,” Barrett said.
“If you look at the steel industry as a whole — the different types of steel — it’s a global market,” he said. “The merger of two large U.S. companies into an even larger U.S. company does not create, in my mind, any antitrust concerns.”
When asked if it had concerns with the potential for Cliffs to buy U.S. Steel, a Federal Trade Commission spokesperson told the Duluth News Tribune that the agency does not comment or disclose concerns it has over a specific company or deal.
Lawmakers want U.S. company
Whatever company buys U.S. Steel, lawmakers on both sides of the aisle want it to be a U.S.-based company.
“If a sale happens, my hope is it remains an American company,” U.S. Rep. Pete Stauber, the Republican congressman from Hermantown, posted Monday on X, formerly Twitter.
That same day, U.S. Rep. Ro Khanna, D-Calif., posted on X that he wanted U.S. steel companies to rival Chinese steelmakers. Nine of the top 15 global steel producers are Chinese, he said. An investor presentation by Cliffs says the same thing.
“Any new steel acquisitions in the US must be led by American companies that support union workers,” Khanna posted.
