US Steel says bids being considered

An Aug. 29 letter from the two top executives of Pittsburgh-based United States Steel Corp. to the firm’s shareholders says the company’s board of directors is engaged in an open-ended process to review more than one bid it has received from potential buyers.

Fellow steelmaker Cleveland-Cliffs has been the most prominent bidder, though it was joined for about 10 days by Pennsylvania-based steel service center operator Esmark Inc. (The Esmark bid was put on hold Aug. 23.)

Beyond those two bids, any others have remained out of public view. However, the letter from U.S. Steel President and CEO and David B. Burritt and board Chair David S. Sutherland refers to “multiple, credible bidders.”

The duo also describes interest in U.S. Steel as consisting of “multiple unsolicited proposals, ranging from the acquisition of parts of the company to consideration for acquiring all of U.S. Steel.” The Cleveland-Cliffs bid falls into the latter category, as described by the Cleveland-based company’s own announcements.

Burritt and Sutherland say the current management team’s effort involving “moving down the cost curve and moving up the talent curve” is one of the reasons U.S. Steel is receiving unsolicited bids.

“Our No. 1 obligation is to uphold our fiduciary duties,” the executive say. “While some companies undertake this kind of review privately, we chose to make it public to ensure that the process is as robust as possible and the board hears all options from any party that has an interest in our company.”

Also potentially a factor in the openness of the process is the involvement of the United Steelworkers (USW). Cleveland-Cliffs has secured the support of the USW, which as part of its current contract has the right to approve or reject any acquisition of U.S. Steel.

In the meantime, Burritt and Sutherland say the U.S. Steel board has entered into “customary confidentiality agreements with numerous third parties” and is starting to share due diligence information under the agreements.

“While we don’t know how long the process will take, the board of directors, management team and outside advisors are moving quickly to complete it, all while focused on driving maximum value," the executives conclude in the letter. "Once the review of the strategic alternatives is completed, the board will decide on a path forward for the company that it believes is in the best interest of U.S. Steel stockholders.”