- Cleveland-Cliffs Refused to Allow for a Standard Process to
Assess Their Offer
- Company Reaffirms Invitation for Cleveland-Cliffs to
Participate in the Strategic Review
United States Steel Corporation (NYSE: X) (“U. S. Steel” or “the
Company”) today confirmed that it has invited Cleveland-Cliffs Inc.
(“Cleveland-Cliffs”) to participate in its previously announced
strategic review process. The Company previously disclosed it has
commenced a formal review process, with the assistance of outside
financial and legal advisors, to evaluate strategic alternatives
for the Company after receiving multiple unsolicited proposals that
ranged from the acquisition of certain production assets to
consideration for the whole Company.
The Company had received an unsolicited cash and stock proposal
from Cleveland-Cliffs to acquire all of U. S. Steel’s outstanding
shares. As detailed in the letter below, U. S. Steel was unable to
properly evaluate the proposal because Cleveland-Cliffs refused to
engage in the necessary and customary process to assess valuation
and certainty unless U. S. Steel agreed to the economic terms of
the proposal in advance.
The full text of U. S. Steel’s letter to Cleveland-Cliffs,
transmitted at 12:01 pm ET on August 13, 2023, is as follows:
August 13, 2023
Dear Lourenco,
I am writing on behalf of United States Steel
Corporation (the “Company”) in response to Cleveland-Cliffs Inc.’s
proposal letter dated July 28, 2023 and further updated on August
11, 2023. Since receiving your initial proposal, the Company’s
Board has met multiple times, with the assistance of our financial
advisors, Barclays and Goldman Sachs, and our legal advisors,
Milbank and Wachtell, to evaluate the merits and risks of your
proposal.
At my and the Board’s direction, our advisors
indicated our willingness to enter into an NDA with you on August
7, 2023, so that we could have further clarity on several key
issues, including valuation of the stock component of your
proposal, regulatory risk and timing as well as the prospects for
the combined company. We discussed with your counsel questions that
would need to be better understood in order for both of us to
appropriately assess the antitrust risk of your proposal; and while
your counsel agreed that this would need to be analyzed, and was
amenable to our proposal to work on this together, this still has
not happened. After multiple conversations about, and our team’s
engagement in good faith negotiations over, the terms of the NDA,
we were shocked to receive a letter on Friday, August 11th stating
that you refused to sign the nearly completed NDA unless we agree
to the economic terms of your proposal in advance.
As you well know, our Board – or any board –
could not, consistent with its fiduciary duties, agree to a
proposal of which 50% is represented by your stock without
conducting a thorough and completely customary due diligence
process, to evaluate the risks and potential upsides and downsides
inherent in the transaction, including the stock component. Doing
otherwise would be tantamount to accepting a price without knowing
what it in fact represents. Nor could our Board agree to your
“headline price” without appropriate discussion – under NDA –
regarding the contribution of U. S. Steel to the value of the
combined businesses. Pushing our Board to do so is in essence a
demand that it breach its fiduciary duties.
The Company, led by the Board and management
team, has made significant progress transforming the Company into a
customer-centric, world-competitive Best for All® steelmaker as we
continue to win in strategic markets, move down the cost curve and
move up the talent curve. This proven strategy has provided
customers with profitable steel solutions for people and the
planet, while rewarding our stockholders. At this juncture, we
cannot determine whether your unsolicited proposal properly
reflects the full and fair value of the Company.
For all of the above reasons, the Board has
no choice but to reject your unreasonable proposal.
The U. S. Steel Board remains committed to
maximizing value for stockholders, and to that end has decided to
initiate a formal review process to evaluate strategic
alternatives. If you would like to engage in that process, we
invite you to reach out to our financial and legal representatives
and welcome you to join our process.
Sincerely,
David Burritt
President & Chief Executive Officer
Advisors
Barclays Capital Inc. and Goldman Sachs & Co. LLC are
serving as financial advisors to U. S. Steel. Milbank LLP and
Wachtell, Lipton, Rosen & Katz are acting as legal
advisors.
Founded in 1901, United States Steel Corporation is a leading
steel producer. With an unwavering focus on safety, the Company’s
customer-centric Best for All® strategy is advancing a more secure,
sustainable future for U. S. Steel and its stakeholders. With a
renewed emphasis on innovation, U. S. Steel serves the automotive,
construction, appliance, energy, containers, and packaging
industries with high value-added steel products such as U. S.
Steel’s proprietary XG3® advanced high-strength steel. The Company
also maintains competitively advantaged iron ore production and has
an annual raw steelmaking capability of 22.4 million net tons. U.
S. Steel is headquartered in Pittsburgh, Pennsylvania, with
world-class operations across the United States and in Central
Europe. For more information, please visit www.ussteel.com.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
This release contains information that may constitute
“forward-looking statements” within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. We intend the
forward-looking statements to be covered by the safe harbor
provisions for forward-looking statements in those sections.
Generally, we have identified such forward-looking statements by
using the words “believe,” “expect,” “intend,” “estimate,”
“anticipate,” “project,” “target,” “forecast,” “aim,” “should,”
“plan,” “goal,” “future,” “will,” “may,” and similar expressions or
by using future dates. However, the absence of these words or
similar expressions does not mean that a statement is not
forward-looking. Forward-looking statements are not historical
facts, but instead represent only the Company’s beliefs regarding
future events, many of which, by their nature, are inherently
uncertain and outside of the Company’s control. It is possible that
the Company’s actual results, financial condition and developments
may differ, possibly materially, from the anticipated results,
developments and financial condition indicated in these
forward-looking statements. Management believes that these
forward-looking statements are reasonable as of the time made.
However, caution should be taken not to place undue reliance on any
such forward-looking statements because such statements speak only
as of the date when made. Our Company undertakes no obligation to
publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise, except
as required by law. In addition, forward-looking statements are
subject to certain risks and uncertainties that could cause actual
results to differ materially from our Company's historical
experience and our present expectations or projections. These risks
and uncertainties include, but are not limited to, whether the
objectives of the strategic alternative review process will be
achieved; the terms, structure, benefits and costs of any strategic
transaction; the timing of any transaction and whether any
transaction will be consummated at all; the risk that the strategic
alternatives review and its announcement could have an adverse
effect on the ability of the Company to retain customers and retain
and hire key personnel and maintain relationships with customers,
suppliers, employees, shareholders and other business relationships
and on its operating results and business generally; the risk the
strategic alternatives review could divert the attention and time
of the Company’s management, the risk of any unexpected costs or
expenses resulting from the review; the risk of any litigation
relating to the review; and the risks and uncertainties described
in “Item 1A. Risk Factors” in our Annual report on Form 10-K for
the year ended December 31, 2022 and those described from time to
time in our future reports filed with the Securities and Exchange
Commission.
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version on businesswire.com: https://www.businesswire.com/news/home/20230813553113/en/
Tara Carraro Senior Vice President, Chief Communications
Officer T- 412-433-1300 E- media@uss.com
Kelly Sullivan / Ed Trissel Joele Frank, Wilkinson
Brimmer Katcher T- 212-355-4449
Kevin Lewis Vice President Finance T- 412-433-6935 E-
klewis@uss.com
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