Cleveland-Cliffs (CLF) -) said it made a formal proposal to buy U.S. Steel (X) -) that was rejected by the Pittsburgh-based group just hours after it received "multiple unsolicited proposals" from unnamed rivals.
Cleveland-Cliffs said it was prepared to pay $32.53 a share for Pittsburgh-based U.S. Steel, based on $17.50 per share in cash and 1.023 shares of Cleveland-Cliffs stock. That would be a 43% premium to U.S. Steel's Friday closing price and a level that would value the country's second-biggest steelmaker at around $7.26 billion.
U.S. Steel, Cleveland-Cliffs said, rejected the cash and shares deal as "unreasonable" in a letter sent to the group on Sunday. Cleveland-Cliffs said it "stands ready to engage on this offer immediately" despite the U.S. Steel rejection.
"After two weeks without any substantive engagement from U.S. Steel with respect to the economic terms contained in our compelling proposal, U.S. Steel’s board of directors rejected our proposal, calling it ‘unreasonable," said Cleveland-Cliffs CEO Lourenco Goncalves. "As such, I believe it necessary to now make our proposal public to help expedite substantive engagement between our two companies."
"Although we are now public, I do look forward to continuing to engage with U.S. Steel on a potential transaction, as I am convinced that the value potential and competitiveness to come out of a combination of our two iconic American companies is exceptional,” he added.
U.S. Steel shares closed at $22.72 each on the New York Stock Exchange Friday, after rising 0.98% on the session to peg their year-to-date decline at around 9.3% with a market value of $5.1 billion.
Cleveland-Cliffs shares ended Friday at $14.69 each, down 12.5% on the year, with a market value of $7.5 billion.
Earlier Sunday, U.S. Steel CEO David Burritt said the group had received "multiple unsolicited proposals" that ranged from a whole purchase to offers for parts of the business, adding that the board would take a "measured approach to considering these proposals, including seeking more information in order to evaluate proposals that are preliminary and subject to ongoing due diligence and review.”
"The interest demonstrated by the unsolicited proposals received to date is a validation of U. S. Steel’s strategy and successful track record of execution," he added. "While the Board conducts its review of previously received proposals and other proposals it expects to receive, our entire team remains focused on safely and responsibly executing across all of our operations and advancing our Best for All strategy, while continuing to deliver for all stakeholders.”
