Talks are intensifying between U.S. Steel and potential suitor Cleveland-Cliffs about a possible takeover.
The United Steelworkers union (USW) said this week it only would back the Cleveland-based steel producer in acquiring the iconic Pittsburgh company.
In announcing the potential agreement, Cleveland-Cliffs said it “is the only realistic buyer able to acquire the totality of U.S. Steel.”
Cleveland-Cliffs also said it would uphold contracts between U.S. Steel and its USW employees, should a deal be consummated. USW has 14,000 members at Cleveland-Cliffs and 11,000 at U.S. Steel.
However, U.S. Steel said the union doesn’t have the authority to nix any deals.
While its contracts with USW provide “successorship rights and the Right to Bid, it does not provide the USW or its assignee the right to veto any transaction,” the 122-year-old steel producer said in a statement.
U.S. Steel rejected a $7.3 billion buyout proposal from Cleveland-Cliffs on Sunday, saying Cleveland-Cliffs was pushing it to accept the terms without being allowed to conduct proper due diligence.
On Monday, Sewickley-based industrial conglomerate Esmark made an offer of $7.8 billion.
In a letter posted to Cleveland-Cliffs’ website, the USW said it “has a very strong relationship with Cliffs and will not exercise this right of a counter offer. It will, rather, unequivocally endorse such a transaction. Moreover, the USW will not endorse anyone other than Cliffs for such a transaction.”
“Cliffs has shown itself to be an outstanding employer to all of its workers, including its long-legacy operations in iron ore and more recently its steel operations from the 2020 acquisitions of AK Steel and Arcelor Mittal USA,” the letter continued. “Different from typical acquirers, Cliffs did not cut union jobs when it bought AK Steel and Arcelor Mittal USA, but rather significantly increased the union workforce.”
Cleveland-Cliffs said its proposal, made 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.
Cleveland-Cliffs is the largest producer of flat-rolled steel and iron in North America.
