U.S. Steel says union cannot block company's sale
Reuters
Published Aug 17, 2023 04:58PM ET
Updated Aug 18, 2023 02:00PM ET
(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.
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.
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Written By: Reuters
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