After receiving two bids to acquire it in the past month, U.S. Steel told its shareholders Tuesday that it is in the process of reviewing multiple offers for the storied company and symbol of American industrialization.
U.S. Steel rejected a $7.3 billion buyout proposal from rival Cleveland-Cliffs two weeks ago, and that offer was followed by $7.8 billion bid from the industrial conglomerate Esmark. Shares of the Pittsburgh steelmaker soared more than 30% on speculation that a deal was imminent.
In a letter to shareholders, U.S. Steel said it had entered into confidentiality agreements with “numerous” third parties and was beginning to share due diligence information with potential buyers.
“Our number one obligation is to uphold our fiduciary duties,” the company wrote in the letter. “This means that we are focused on the path forward for our Company that drives the most value for you — our stockholders.”
Shares climbed another 2% Tuesday.
The proposal by Cleveland-Cliffs, first made on July 28, would create a company that would be among the 10 biggest steelmakers in the world and one of the top four outside of China, which dominates global steel production today. Cleveland-Cliffs CEO Lourenco Goncalves said a tie-up between the two U.S. steelmakers would create “lower-cost, more innovative and stronger domestic supplier for our customers.”
Goncalves has said that he's ready to continue talks with 122-year-old U.S. Steel despite the rejection of its initial offer.
Soaring prices have helped fuel consolidation in the steel industry this decade. Steel prices more than quadrupled near the start of the pandemic to near $2,000 per metric ton by the summer of 2021 as supply chains experienced gridlock, a symptom of surging demand for goods and the lack of anticipation of that demand.
Cleveland Cliffs acquired AK Steel in 2019 right before steel prices began to spike and within a year, it acquired ArcelorMittal USA in 2020 for $1.4 billion. U.S. Steel bought Big River Steel the following year.
Prices have settled back to around $800 per metric ton, but that remains at the top end of the spectrum for steel prices over the past six years.
U.S. Steel has been a symbol of industrialization since it was founded in 1901 by J.P. Morgan, Andrew Carnegie and others, and the domestic steel industry dominated globally before Japan, then China, became the preeminent steelmakers over the past 40 years.
