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Steelmaker Battle Intensifies as Esmark Makes $7.8 Billion Offer for U.S. Steel

 |  August 15, 2023

The long-brewing battle for US Steel got a jump start after Esmark, a privately held company, announced Monday it had made an offer to buy the giant steelmaker for an equity value of $7.8 billion.

According to Reuters, “Esmark makes $7.8-billion offer for U.S. Steel Corp.” The company’s bidding price for the United States’ largest steelmaker is $35 per share.

Esmark’s offer comes on the heels of U.S. Steel’s Sunday announcement that it was launching a strategic review of its options after rebuffing an unsolicited cash-and-stock offer from Ohio-based rival steelmaker Cleveland-Cliffs.

Reuters notes that “Esmark, a privately held company, said on Monday it had made an offer to buy U.S. Steel for $35 per share, or an equity value of $7.8 billion.”

The unsolicited bid from Cleveland-Cliffs priced U.S. Steel at an estimated $7.3 billion, a premium of 43% on Friday’s closing stockpile. In comparison, Esmark’s offer is $7.8 billion for the company stock.

Esmark’s offer to buy includes $35 per share and 1.023 shares of Cliffs for each U.S. Steel share. If accepted, the offer would be expected to be finalized in the fourth quarter of this year, pending regulatory and antitrust clearances.

Chair and CEO of Esmark, James P. Bouchard, commented on the offering statement, noting that “This is an exciting time as the entire American Steel industry is restructuring. We are anxious to continue to grow and we’re well positioned to come in and operate.”

Read more: US Steel Rejects $7.3 Billion Buyout Offer from Cleveland-Cliffs

U.S. Steel’s stock has had a turbulent weekend following the new offers, jumping 37% on Monday in the biggest spike in its history. Though, as of early trading Tuesday, the company saw its shares dipping 3%.

The century-old steel company has outlived tumultuous markets for over a century, with the last five decades marked by major shifts in the supply and demand of the sector across the world.

Esmark’s bid for U.S. Steel is the latest development in the vast steel market, and whether or not the company will accept remains unknown.

But regardless of what the future holds, both Esmark and Cleveland-Cliffs have shaked up the traditionally sluggish market with their bids, ending a long transaction-deadlock period and rekindling intense competition within the industry.

It is now up to U.S. Steel to make a decision that could impact its larger corporate history.

Source: WSJ