U.S. Steel Corp. is looking for a buyer—but according to the United Steelworkers, they’ve already found one. Other companies are taking notice.
Esmark Corp. announced yesterday that it would not compete with Cleveland-Cliffs for the purchase of U.S. Steel, in recognition of USW’s strong support for the other company. The union has vowed to block any U.S. Steel sale not made to the Cleveland-based steelmaker.
On August 15, Esmark signaled its intention to make a formal offer for U.S. Steel, but on August 23, CEO Jim Bouchard said the company would respect the wishes of the USW and withdraw from bidding. In a statement, Bouchard cited Esmark’s historical partnership with the USW.
“The USW was our partner in the successful acquisition of Wheeling Pittsburgh Steel, and we remain close with them,” Bouchard said in a statement. “The U.S. Steel board must go through their process that they previously announced. We wish them the best during this process, and we will evaluate any opportunities in connection with that process, subject to support from the USW.”
Esmark’s withdrawal from bidding means U.S. Steel’s opportunities for buyers are shrinking. Brazilian steelmaker CSN also announced August 23 it would not make a bid for U.S. Steel: In remarks, CSN CEO Benjamin Steinbruch said the company is “too big of an asset” as CSN looks to “reduce our leverage.”
A few days after Cleveland-Cliffs offered to pay $7.8 billion to buy U.S. Steel Corp.—and several days before either company went public with news of that offer—Thomas Conway, international president of the USW, authored an open letter saying the USW would support Cleveland-Cliffs’ bid alone even though it has, per its contract with U.S. Steel, the right to make a counter offer on any plan that would change U.S. Steel’s ownership.
“The USW has a very strong relationship with Cliffs and will not exercise this right of a counter offer,” Conway wrote. “The USW will not endorse anyone other than Cliffs for such a transaction.”
The union’s ringing endorsement, Conway added, stems from the union’s experience with Cleveland-Cliffs after it bought AK Steel and ArcelorMittal USA in 2020. Following those deals, he wrote, Cleveland-Cliffs “rather significantly” increased its union workforce, which now tops 14,000. The two sides last year worked together on new contracts that run through August 2026 and Cleveland-Cliffs executives have been clear about how they view the union’s role.
“Maintaining strong, positive relationships with labor unions is key to our long-term growth,” they wrote in their most recent annual report. “We engage with our unions as business partners, and together we have achieved a number of successes that benefit our business and our people alike.”
Cliffs’s treatment of the union appears to have paid off for its ambition to purchase U.S. Steel. Two days after reiterating their commitment to only clear purchase plans from Cleveland-Cliffs, the Conway wrote to Cleveland-Cliffs to transfer the USW’s right to bid in exchange for Cliffs’ agreement to honor the terms of previous USW-U.S. Steel agreements. Lourenco Goncalvez, CEO of Cleveland-Cliffs, signed the letter and posted a copy to the company’s website.
Cleveland-Cliffs has since claimed that U.S. Steel now must “promptly” inform both the USW and Cleveland-Cliffs if U.S. Steel receives a proposal from any third party.
For its own part, U.S. Steel maintains that the USW’s Right to Bid is not a silver bullet to kill any deal. In a regulatory filing, the company said its board still has the right to reject union-made counter offers if the board deems the original offer superior, according to Reuters. But the pressure from the USW and Cliffs along with Esmark’s departure may make such offers scarce.