font size
Show More

ss="textresizer__button textresizer__button--dec"/>

fight for

United States Steel

It has already taken a number of unexpected twists and turns. Investors got another one.

Thursday, mainly United Steelworkers Supported try before

Cleveland Cliffs

(Stock ticker: CLF) to acquire US Steel (X) by ceding its right to bid for the steel company to Cliffs. This is important because an agreement between Union and US Steel specifies that if the union submits bids, the company is not allowed to accept other bids unless the board determines they are superior.

The second condition of the employment agreement is that any buyer must reach an agreement with the union before the deal can be closed. It seems that the buyer can also agree with the union to assume the terms of the current employment contract. US Steel did not immediately respond to a request for clarification.

A Cliffs spokesperson said in an emailed statement that the agreement and rights transfer give the union “a de facto veto over a potential sale of the entire company.”

About 80% of US Steel’s employees in North America and Slovakia are covered by collective bargaining agreements.

US Steel disagrees. “We understand that USW has transferred (rights) to the Cleveland-Cliffs … While[the basic business agreement]grants USW[certain rights]it does not give USW or its assigns the right to reverse any transaction,” a company spokesperson said in a statement. Email Statement “Our commitment to and ability to conduct a thorough and comprehensive review of strategic alternatives to maximize value for our shareholders remains unchanged.”

A stock price, for example, doesn’t always determine the best bid. The mix of cash and inventory can be important. Sometimes investors prefer one over the other. Cliffs offer is a mixture of cash and stock.

The ability to close the deal is also important. KeyBanc analyst Philip Gibbs indicated in a report earlier this week that the Cliffs-US Steel group would attract antitrust scrutiny. Both companies are major players in the North American iron ore and steel markets.