Esmark Inc. has put forward a proposal to acquire United States Steel Corp. for a cash offer of $7.8 billion, surpassing a previous proposal from Cleveland-Cliffs Inc. This intensifies the contest surrounding the fate of this US industrial titan.
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Esmark’s unexpected move caught many off-guard. Historically, Esmark’s expertise lies in steel processing and distribution rather than raw steel production, which is US Steel’s primary domain. James Bouchard, Esmark’s CEO and once an executive at US Steel, confirmed in a call that they have the necessary funds for the proposed acquisition.
US Steel shares witnessed a dramatic surge post Esmark’s announcement, recording their most significant single-day leap. However, the closing stock price is still short of Esmark’s offered rate.
This recent development is just one in a series of events poised to alter the domestic steel industry’s future. After declining the $7.25 billion proposal from Cliffs, US Steel revealed that it had initiated a strategic review due to multiple acquisition offers. With Cliffs’ CEO Lourenco Goncalves optimistic about his bid’s success, Esmark’s move added another layer of intrigue to the mix.
Josh Spoores, a steel analyst at CRU, expressed his surprise at Esmark’s move, anticipating other steel producers to express their interest soon.
Reacting to Esmark’s bid, a spokesperson from US Steel shared that Esmark’s interest was news to them but welcomed their involvement in the ongoing strategic review process.
For Bouchard, the driving factor behind this proposal was ensuring that US Steel remains under American ownership. Emphasizing the company’s growth, he expressed the need to restore US Steel to its former glory and maintain its American identity.
Years ago, Esmark made headlines when it divested its steel assets to Russia’s OAO Severstal and subsequently repurchased some facilities in 2010. However, their proposal for US Steel far outweighs their past dealings.
Currently, Esmark stands as a top processor and distributor of enhanced flat-rolled steel in the US and holds the position as the third-largest tin plate steel producer domestically.
Rooted in the early 20th century, US Steel’s legacy dates back to its inception by J. Pierpont Morgan and Andrew Carnegie’s collaborative efforts. Under the leadership of CEO David B. Burritt since 2017, the company has pivoted towards modern steel production techniques.
Outlook for the Coming Week: The landscape of the steel industry is rapidly evolving, with big players making strategic moves. As more details about these offers come to light, it will be crucial to watch how other industry giants react and position themselves. The coming week is poised to bring more clarity and possibly even newer bids or alliances.
