Cleveland-Cliffs proposes to acquire U.S. Steel

Cleveland-Cliffs (CLF) publicly announced a previously private offer that it had presented to the Board of the United States Steel Corporation (X) on July 28, 2023. That offer, which was reiterated in writing to the U.S. Steel Board on August 11, 2023, proposed acquiring 100% of the outstanding stock of U.S. Steel for a per share value of $17.50 in cash and 1.023 shares of Cliffs stock. On July 28, 2023, this implied a total consideration value of $35.00 per share of U.S. Steel stock, which represented a 42% premium to U.S. Steel’s share price as of the market close on July 28, 2023. As of the close of market on Friday, August 11, 2023, this offer represents a 43% premium to U.S. Steel’s share price. Notwithstanding the compelling economic terms of Cliffs’ offer, it was rejected as being “unreasonable” by the Board of Directors of U.S. Steel via a letter Cliffs received today, August 13, 2023. As such, Cliffs feels compelled to make its offer publicly known for the direct benefit of all of U.S. Steel’s stockholders and also make it known that Cliffs stands ready to engage on this offer immediately. Under the terms of the United Steelworkers’ collective bargaining agreement with U.S. Steel, the USW has the right to counter this proposal. On this matter, the USW has affirmed in writing to Cliffs that it endorses the transaction and will not exercise this right. Furthermore, the USW has also stated that it will not endorse anyone other than Cliffs for a transaction. The proposed transaction has the unanimous approval of Cliffs’ Board of Directors and is not subject to any financing condition. Several tier 1 U.S. and international banks have advised in writing that they are highly confident that they will be able to arrange the necessary debt financing for the proposed transaction. In addition, based on review by outside counsel, Cliffs believes the proposed transaction would receive regulatory approval in a timely manner.