Creates the Only American Steel Company Among
the Top 10 Steelmakers in the World and One of the World’s Top 4
outside of China
Provides Customers and Workers a Stronger and
More Innovative American Steel Producer, With Scale to be
Internationally Competitive
Provides U.S. Steel Shareholders an Immediate
and Substantial Premium of 43% and Significant Upside Potential
from the Combined Company
Combined Company Expected to Generate Synergies
of Approximately $500 Million
Proposal Provides a Clear Roadmap to
Completion, including the Strong Support and Backing of the USW
Cleveland-Cliffs Inc. (NYSE: CLF) (“Cleveland-Cliffs” or
“Cliffs”) is publicly announcing a previously private offer that it
had presented to the Board of the United States Steel Corporation
(NYSE:X) (“U.S. Steel”) 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’ (USW) 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
letter of support from the USW related to the transaction can be
found on Cliffs’ website at www.clevelandcliffs.com.
To provide context to the above proposal, Lourenco Goncalves,
Chairman, President and Chief Executive Officer of Cleveland-Cliffs
said, “On July 28th I approached U.S. Steel’s CEO and Board with a
written proposal to acquire U.S. Steel for a substantial premium,
valuing the company at $35.00 per share with 50% cash and 50%
stock. After two weeks without any substantive engagement from U.S.
Steel with respect to the economic terms contained in our
compelling proposal, U.S. Steel’s board of directors rejected our
proposal, calling it ‘unreasonable.’ As such, I believe it
necessary to now make our proposal public to help expedite
substantive engagement between our two companies. Although we are
now public, I do look forward to continuing to engage with U.S.
Steel on a potential transaction, as I am convinced that the value
potential and competitiveness to come out of a combination of our
two iconic American companies is exceptional.”
Mr. Goncalves continued, “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. 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.
Furthermore, the transaction provides immediate multiple expansion
to U.S. Steel stockholders, while simultaneously de-risking U.S.
Steel’s future capital spend with our substantial expected free
cash flow and very healthy balance sheet. We also plan to ramp up
capital returns to shareholders and implement a dividend upon
completion of the transaction.” Presentation slides that expand on
the compelling strategic rationale of Cliffs’ proposal can be found
on Cliffs’ website at www.clevelandcliffs.com.
Mr. Goncalves concluded, “Most importantly, our proposal has the
full support of the United Steelworkers union. This is a testament
to our unwavering commitment to our employees -- which would number
approximately 40,500 pro forma for the transaction -- as well as to
the communities in which we operate. We have proven in our previous
M&A transactions our strong track record of significant value
creation and our ability to grow the business through the addition
of thousands of union jobs. Finally, with this transaction we will
create the only American member of the Top 10 steel companies in
the World, joining a select group of just three other companies
outside of China -- one European, one Japanese and one Korean. We
believe that having Cleveland-Cliffs as a world-class,
internationally competitive steel company is critical for our
country to retain its economic leadership and to regain its
manufacturing independence.”
As was noted in the letter that Cliffs sent to U.S. Steel on
July 28, 2023, Cliffs remains prepared to engage immediately in
substantive discussions with U.S. Steel to work towards a mutually
acceptable definitive agreement and is ready to commit all
necessary resources to finalize documentation.
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.
Moelis & Company LLC, Wells Fargo, J.P. Morgan and UBS are
acting as financial advisors to Cliffs and Davis Polk &
Wardwell LLP is serving as legal counsel.
About Cleveland-Cliffs Inc.
Cleveland-Cliffs is the largest flat-rolled steel producer in
North America. Founded in 1847 as a mine operator, Cliffs also is
the largest manufacturer of iron ore pellets in North America. The
Company is vertically integrated from mined raw materials, direct
reduced iron, and ferrous scrap to primary steelmaking and
downstream finishing, stamping, tooling, and tubing.
Cleveland-Cliffs is the largest supplier of steel to the automotive
industry in North America and serves a diverse range of other
markets due to its comprehensive offering of flat-rolled steel
products. Headquartered in Cleveland, Ohio, Cleveland-Cliffs
employs approximately 27,000 people across its operations in the
United States and Canada.
Forward-Looking Statements
This release contains statements that constitute
"forward-looking statements" within the meaning of the federal
securities laws. All statements other than historical facts,
including, without limitation, statements regarding our current
expectations, estimates and projections about our industry, our
business or a transaction with United States Steel Corporation
(U.S. Steel), are forward-looking statements. We caution investors
that any forward-looking statements are subject to risks and
uncertainties that may cause actual results and future trends to
differ materially from those matters expressed in or implied by
such forward-looking statements. Investors are cautioned not to
place undue reliance on forward-looking statements. Among the risks
and uncertainties that could cause actual results to differ from
those described in forward-looking statements are the following:
the risk that a transaction with U.S. Steel may not be consummated;
the risk that a transaction with U.S. Steel may be less accretive
than expected, or may be dilutive, to Cliffs’ earnings per share,
which may negatively affect the market price of Cliffs common
shares; the possibility that Cliffs and U.S. Steel will incur
significant transaction and other costs in connection with a
potential transaction, which may be in excess of those anticipated
by Cliffs; the risk that the financing transactions to be
undertaken in connection with a transaction have a negative impact
on the combined company’s credit profile or financial condition;
the risk that Cliffs may fail to realize the benefits expected from
a transaction; the risk that the combined company may be unable to
achieve anticipated synergies or that it may take longer than
expected to achieve those synergies; the risk that any
announcements relating to, or the completion of, a transaction
could have adverse effects on the market price of Cliffs common
shares; and the risk related to any unforeseen liability and future
capital expenditure of Cliffs related to a transaction.
For additional factors affecting the business of Cliffs, refer
to Part I – Item 1A. Risk Factors of our Annual Report on Form 10-K
for the year ended December 31, 2022, and other filings with the
U.S. Securities and Exchange Commission.
Important Information for Investors and Stockholders
This communication relates to a proposal which Cliffs has made
for an acquisition of U.S. Steel. In furtherance of this proposal
and subject to future developments, Cliffs may file one or more
registration statements, proxy statements, tender offer statements
or other documents with the Securities and Exchange Commission
(“SEC”). This communication is not a substitute for any proxy
statement, registration statement, tender offer statement or other
document Cliffs may file with the SEC in connection with the
proposed transaction.
Investors and security holders of Cliffs are urged to read the
proxy statement(s), registration statement, tender offer statement
and/or other documents filed with the SEC carefully in their
entirety if and when they become available as they will contain
important information about the proposed transaction. Any
definitive proxy statement(s) (if and when available) will be
mailed to stockholders of Cliffs, as applicable. Investors and
security holders will be able to obtain free copies of these
documents (if and when available) and other documents filed with
the SEC by Cliffs through the website maintained by the SEC at
http://www.sec.gov.
This document shall not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there be
any sale of securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any jurisdiction. No
offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the Securities
Act of 1933, as amended.
This communication is neither a solicitation of a proxy nor a
substitute for any proxy statement or other filing that may be made
with the SEC. Nonetheless, Cliffs and its directors and certain of
its executive officers may be considered participants in the
solicitation of proxies in connection with the proposed
transaction. Information about the directors and executive officers
of Cliffs is set forth in its Annual Report on Form 10-K for the
year ended December 31, 2022, which was filed with the SEC on
February 14, 2023, and its proxy statement for its 2023 annual
meeting of shareholders, which was filed with the SEC on April 4,
2023.
Any information concerning U.S. Steel contained in this filing
has been taken from, or based upon, publicly available information.
Although Cliffs does not have any information that would indicate
that any information contained in this filing that has been taken
from such documents is inaccurate or incomplete, Cliffs does not
take any responsibility for the accuracy or completeness of such
information. To date, Cliffs has not had access to the books and
records of U.S. Steel.
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MEDIA CONTACT: Patricia Persico Senior Director,
Corporate Communications (216) 694-5316
INVESTOR CONTACT: James Kerr Manager, Investor Relations
(216) 694-7719
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