Things are heating up in the American steel industry.
Here's the deal: At least two companies have now made unsolicited bids to acquire US Steel, one of the nation's oldest steel companies, setting up a potential bidding war.
On Sunday, US Steel said it was reviewing its options after it received "multiple unsolicited proposals," including for the acquisition of certain assets to a purchase of the whole company outright.
By Monday morning, the board had rejected an offer from rival Cleveland-Cliffs, halting a deal that would have created the nation's largest steelmaker and dramatically reshape the industry.
Talks over that proposal broke down after Cleveland-Cliffs refused to sign a nondisclosure agreement that would allow the two companies to exchange financial information, my colleagues Chris Isidore and Samantha Delouya write. Despite the rejection, Cleveland-Cliffs said it still believes it can get the deal done.
It might have more competition than it bargained for.
Just hours after the Cleveland-Cliffs deal became public, another bidder swooped in.
Esmark, family-owned industrial conglomerate, is now offering to acquire US Steel in an all-cash deal.
James Bouchard, CEO of Esmark (and also a former US Steel executive, in case this saga wasn't twisty enough) said it is an "exciting time" for the American steel industry and "with Esmark's long-standing history of excellence, we are anxious to continue to grow and we're well positioned to come in and operate."
The US steel industry has been in a bit of a funk in recent years. Production shifted overseas and lower-cost Chinese steel undercut American manufacturers. But Trump-era tariffs on Chinese steel, along with Biden-era infrastructure investments, have revived demand for domestic steel.
Shares of US Steel surged double-digits in early trading Monday, and jumped even higher after news of Esmark's offer, rising nearly 40%.
The Esmark bid was a real surprise for Wall Street.
Although Esmark offered $35 a share, US Steel's stock was hovering below $32 — often an indication that investors are skeptical about a deal getting finalized.
"The Esmark bid is a shocker. I would expect that we would see some other steelmakers come into play before what is a traditional service center," Josh Spoores, an analyst at industry consultant CRU, told Bloomberg. "I don't know what to make of it. It's a head scratcher."
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