Cleveland-Cliffs is making steady progress towards its goal of acquiring United States Steel (ticker: X), positioning itself at the forefront of the domestic steel industry.
During the past week, Esmark, a potential buyer for United States Steel, withdrew from the process after Cleveland-Cliffs gained the support of the United Steelworkers union for its bid. Overcoming this hurdle was relatively easy for Cleveland-Cliffs, as Gordon Haskett analyst Don Bilson criticized Esmark’s rival bid as “disingenuous” due to a lack of financing details.
United States Steel is still in the early stages of its strategic-alternatives review process, which may involve a complete sale of the company, divestitures, or maintaining the status quo.
Investors remain optimistic that a deal will ultimately materialize. Although U.S. Steel shares have not yet reached the $35 level of Cleveland-Cliffs’ offer, they have surged by more than 30% since the company announced the review process on August 13. This indicates investor anticipation for some form of transaction. The review process does not have a specific deadline or timetable.
Acquiring U.S. Steel would be a natural move for Cleveland-Cliffs, given its track record of acquisitions. The Cleveland-based company purchased AK Steel in March 2020 and ArcelorMittal USA in December of the same year. If successful, the combination of Cleveland-Cliffs and U.S. Steel would make them the only U.S.-based company among the top 10 steel producers worldwide. Currently, six of the top 10 are based in China.
While there may be unforeseen twists and turns in deal negotiations, Cleveland-Cliffs’ lead seems to be expanding.
