Esmark Bids for U.S. Steel, Setting Up Potential Battle for Steelmaker

Esmark said it made an all-cash offer to acquire United States Steel, ratcheting up competition to acquire the century-old steelmaker. 

Esmark is a Pennsylvania-based industrial conglomerate with deep ties to the steel industry. The privately owned company is headed by James Bouchard, a former vice president for U.S. Steel’s European business, and operates steel processing and distribution businesses. 

Esmark said it offered $35 a share Monday to acquire all issued and outstanding shares in U.S. Steel. “This is an iconic business that built the United States,” Bouchard said in an interview. “It should be in American hands.”

A U.S. Steel spokesman had no immediate comment.

U.S. Steel, founded in 1901, dominated the steel industry for decades as a top supplier of steel to carmakers, the appliance industry and construction companies. The company is now the focus of multiple offers aiming to fold its mills and iron ore mines into other steel companies, after rival steelmaker Cleveland-Cliffs said on Sunday that it separately offered to acquire U.S. Steel in a cash and stock deal that would value it at about $35 a share.

While U.S. Steel is considered one of the steel industry’s high-cost producers, analysts said parts of the company appeal to other steel industry players. U.S. Steel has large reserves of iron ore, which is increasingly in demand as scrap steel supplies tighten.

The company’s Big River mill in Arkansas is one of the newest mills in the country and one of just two sites in the U.S. that will be capable of producing steel for electric vehicle motors. U.S. Steel also makes pipe for frack well drilling, and tin-coated sheet steel for food cans.

Cleveland-Cliffs didn’t respond to requests for comment on the Esmark offer. Cleveland-Cliffs Chief Executive Lourenco Goncalves said Sunday that a combination between his company and U.S. Steel would create a lower-cost and more innovative supplier to steel-buying clientele such as automotive and appliance manufacturers.

U.S. Steel said on Sunday that it rejected Cleveland-Cliffs’ offer, calling it “unreasonable.” U.S. Steel CEO David Burritt

Shares of U.S. steel climbed 36.8% Monday to settle at $31.08, the stock’s biggest percentage increase on record and its highest close since March 2, 2023, according to Dow Jones Market Data, based on data going back to 1991. The stock closed Friday at $22.72.

Cleveland-Cliffs stock gained 8.8% Monday, while the S&P 500 increased by 0.6%.

The steel industry is dealing with slowing demand, as shipments from domestic mills last year declined 5.5% from 2021, according to the American Iron and Steel Institute, a trade group. Steel prices have been on the decline since spring, after distributors and manufacturers made purchases earlier in the year to replenish drawn-down steel inventories.

Producers including U.S. Steel, Nucor and Steel Dynamics are continuing to invest in new or expanded plants, which together could add more than 12 million tons a year of additional flat-rolled steel production capacity over the next several years. Industry executives anticipate infrastructure spending on roads and bridges to energize demand, as well as new plants for semiconductors and electric vehicle batteries.

Bouchard formed Esmark in the mid-2000s as an acquisition company. After buying several steel distributors, Esmark purchased West Virginia-based steelmaker Wheeling-Pittsburgh Steel. Esmark sold the steel company in 2008 to Russia’s Severstal. 

Esmark’s initial offer period for U.S. Steel runs from Aug. 14 to Nov. 30, the company said in a press release.

Cleveland-Cliffs submitted its own offer for U.S. Steel on July 28, Goncalves said over the weekend. After U.S. Steel notified Cleveland-Cliffs Sunday that it rejected the offer, Cleveland-Cliffs decided to take its proposal public to hasten discussions between the two companies, Goncalves said.

—Denny Jacob contributed to this article.

Write to Bob Tita at [email protected]