(Credit: U.S. Steel)After making significant progress toward carbon emissions reduction, U.S. Steel has initiated a formal review process, evaluating strategic alternatives for the company, including potentially selling the company.
This follows an announcement from one of the company’s main rivals, Cleveland-Cliffs, that publicized their once-private offer to U.S. Steel. U.S. Steel rejected the first offer, which included a 43% premium to the company’s share price. Cleveland-Cliffs made their new offer of $35 per share, with 50% cash and 50% stock, public in order to expedite a response from the company.
Cleveland-Cliffs claims acquisition of the company would complement the companies’ shared interest in sustainability efforts.
“The numerous benefits we are excited about include the combination of our complementary U.S.-based footprint, our ability to leverage our in-house metallics capabilities, and enhancing our shared focus on emissions reduction,” said Lourenco Goncalves, CEO of Cleveland-Cliffs. “With these benefits, combined with our experience of extracting meaningful synergies from previous acquisitions, we expect to create a lower-cost, more innovative, and stronger domestic supplier for our customers across all segments.”
Since U.S. Steel’s public announcement, Esmark has also announced an all-cash public offer at $35 per share, representing a $7.8 billion offer, and U.S. Steel’s directors report multiple additional bids for the company.
Among steel companies, U.S. Steel maintains one of the most aggressive sustainability targets, with a goal of reaching net zero by 2050 -- the first North American-headquartered steel company to do so. The company also recently secured a $240 million green bond for financing a low-emissions rolled steel mill in Arkansas.
Comparatively, Cleveland-Cliffs has a goal of reducing carbon emissions by 25% by 2030, and Esmark currently lacks any kind of sustainability goals or reporting.
The U.S. Steel executive team reported $477 million in second-quarter profits, less than half of their profits from the same time period last year. Much of this drop is accounted for in the price decrease of flat-rolled and mini-mill products. Investment in mini-mills and electric vehicle motor production marks another key variable in the company’s strategy toward meeting net-zero emissions.
The recent decrease in U.S. Steel’s market value, with their shares dropping around 20% in the past six months, is attributed to their commitment to “decarbonization, deglobalization, and digitization,” according to President and CEO Dave Burritt.
“U.S. Steel has been on a strategic journey executing a compelling transformation,” said Burritt in the company’s report. “The interest demonstrated by the unsolicited proposals received to date is a validation of U. S. Steel’s strategy and successful track record of execution.”
