50% Off! Beat the market in 2025 with InvestingProCLAIM SALE

U.S. Steel says union cannot block company's sale

Published 08/17/2023, 04:58 PM
Updated 08/18/2023, 02:00 PM
© Reuters. FILE PHOTO: FILE PHOTO: U.S. Steel Edgar Thompson Works is seen in Braddock, Pennsylvania, U.S. November 4, 2022. REUTERS/Quinn Glabicki/File Photo
CLF
-
X
-
MT
-

(Reuters) -U.S. Steel said on Thursday that its labor agreement with United Steel Workers (USW) does not afford the union the right to veto a sale of the company that may arise from its recently announced strategic review.

U.S. Steel's statement came after USW said this week it would only back Cleveland-Cliffs (NYSE:CLF) Inc as a suitor for the company. The union said that "over the years, Cliffs has shown itself to be an outstanding employer to all of its workers."

U.S. Steel, which rejected Cliffs' $7.8 billion cash-and-stock offer as inadequate, has said it is exploring "multiple unsolicited proposals". It has attracted a $7.8 billion all-cash offer from Esmark Inc and as well as potential acquisition interest from ArcelorMittal (NYSE:MT) SA.

In a regulatory filing, U.S. Steel said its agreement with the union gives the latter the right to counter with its own acquisition offer for assets covered under their bargaining agreement. If the union does not make an offer its board deems superior, U.S. Steel can sell itself to the bidder of its choosing.

USW representatives did not immediately respond to a request for comment.

The union has transferred its right to counterbid for U.S. Steel assets to Cliffs, which disclosed the arrangement on Thursday in a statement. It was not immediately clear whether this would have any impact on the outcome of the bidding process, given that Cliffs was already participating in it.

© Reuters. FILE PHOTO: FILE PHOTO: U.S. Steel Edgar Thompson Works is seen in Braddock, Pennsylvania, U.S. November 4, 2022. REUTERS/Quinn Glabicki/File Photo

In a presentation on its website, Cliffs had said that the union's labor agreement with U.S. Steel constituted "a practical right to veto" a deal. It pointed to a requirement for the acquirer to reach a labor agreement with the union before a transaction is completed as a means for the union to stop a company sale.

Cliffs also said on Thursday it agreed to keep in place all arrangements between U.S. Steel and union workers, should its bid prevail.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.