Cleveland-Cliffs' proposal, which encompassed a combination of cash and stock, did not align with U.S. Steel's expectation of a "standard process" to evaluate the offer. The proposal was turned down as Cleveland-Cliffs refused to allow for the customary evaluation procedure, the steelmaker said in a statement.
In particular, Cleveland-Cliffs requested U.S. Steel to agree to the economic terms of the proposal prior to signing a Non-Disclosure Agreement (NDA). This approach left U.S. Steel in a position where it couldn't adequately assess the merits of the proposal, it added.
“At this juncture, we cannot determine whether your unsolicited proposal properly reflects the full and fair value of the Company,” David Burritt, President & Chief Executive Officer of U.S. Steel, said in a letter to Cleveland-Cliffs.
Instead, X said it will start a review of its strategic options.
Cleveland-Cliffs offered to pay $17.50 in cash and 1.023 of its shares for each U.S. Steel stock, implying a value of $32.53 per share as of Friday’s close, a 43% premium to US Steel’s last closing price of $22.72.
Cliffs said the new company would create “the only American steel company among the top 10 steelmakers in the world and one of the world’s top 4 outside of China.”
U.S. Steel shares climbed 25% in early Monday trading on the news while CLF stock rise 3%.
This news will particularly be of interest to Senator Tommy Tuberville, who has been actively trading both X and CLF shares in recent months, including the several rounds of selling U.S. Steel shares in June.