US Steel Denies Union Veto Rights In Company Sale

United States Steel Corporation X clarified that its current labor agreement with the United Steel Workers (USW) does not grant the union veto power over potential company sale decisions. 

This statement was made in light of its ongoing strategic review and came after USW expressed its preference for Cleveland-Cliffs Inc CLF as a potential buyer.

Earlier this week, the union supported Cleveland-Cliffs, mentioning the company's long-standing reputation as an "outstanding employer to all its workers." 

Despite this endorsement, U.S. Steel had previously declined a $7.8 billion cash-and-stock offer from Cliffs, citing it as inadequate.

As U.S. Steel navigates its strategic future, it has revealed that it is considering "multiple unsolicited proposals." Reuters reported that among the most notable bids is a $7.8 billion all-cash offer from Esmark Inc and potential acquisition interest from ArcelorMittal SA MT.

In terms of the current labor agreement, U.S. Steel specified in a regulatory filing that while the union can counter with its acquisition bid for assets encompassed within their bargaining agreement, the final decision rests with the company. 

U.S. Steel retains the right to choose its buyer if USW fails to provide an offer deemed superior by the company's board.

In a somewhat unprecedented move, USW has transferred its counterbid rights for U.S. Steel assets to Cliffs. Cliffs unveiled this development on Thursday, highlighting the intricate dynamics of the ongoing bidding process. 

With Cliffs already a participant in this process, the implications of this arrangement remain uncertain.

Furthermore, Cliffs, in its online presentation, had previously insinuated that the USW's labor agreement with U.S. Steel essentially served as a "practical right to veto" any potential deals. 

This assertion was grounded in the belief that the need for an acquirer to finalize a labor agreement with the union before completing a transaction effectively hands veto power to the union.

To solidify its position and possibly assuage union concerns, Cliffs announced its commitment to upholding all existing agreements between U.S. Steel and its union workers if its bid is accepted.

Price Action: X shares are up 0.06% at $31.01, and CLF shares are up 1.20% at $15.14 during the premarket session on the last check Monday.

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