Aug 18, 2023 - Economy

U.S. Steel butts heads with steelworkers union on sale

US Steel tower.

Photo: Justin Merriman/Bloomberg via Getty Images.

U.S. Steel is pushing back against a steelworker union effort to ensure that the company is purchased by rival Cleveland-Cliffs.

Why it matters: The fate of one of America's oldest and most iconic companies hangs in the balance.

Driving the news: The United Steelworkers have a contractual right to bid on Pittsburgh-based U.S. Steel, or certain of its assets, once they've been put up for sale.

  • The union announced on Thursday night that it transferred those rights to Cleveland-Cliffs, which previously offered to buy U.S. Steel for $7.25 billion.
  • The company responded by acknowledging the bid rights transfer, but said in a statement that the provision does not allow the holder to veto a transaction.
  • One big complication for U.S. Steel may be that its union contract requires any buyer to come to terms on a new labor agreement before a transaction closes, which the union argues gives it de facto veto rights.

The big picture: U.S. Steel already rejected the Cleveland-Cliffs bid, prior to publicly announcing that it was exploring strategic alternatives.

  • Privately held Esmark subsequently offered to buy U.S. Steel for $7.8 billion, while ArcelorMittal is reportedly considering a bid as well.
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