Steel Mills
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/images/Featured_News_Icons/US_Steel.png)
Analysts Weigh in on Potential Sale of U.S. Steel
Written by Becca Moczygemba
August 16, 2023
U.S. Steel dropped a bombshell last week when it announced that it is up for sale. While a company buyout would be profitable for any buyer, there could be regulatory hurdles, according to industry analysts.
Recall the Pittsburgh-based steelmaker announced on Aug.13 that it had initiated a formal review process for strategic alternatives after receiving multiple unsolicited offers to buy the company.
The company has already received two publicly-announced offers: One for $7.3 billion in cash and stock from competitor Cleveland-Cliffs, which was rejected by U.S. Steel; and a second, all-cash offer of $7.8 billion from privately held firm Esmark.
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/images/Featured_News_Icons/US_Steel.png)
“U. S. Steel’s Board and management team are committed to maximizing value for our stockholders, and to that end, we have commenced a comprehensive and thorough review of strategic alternatives,” said David B. Burritt, U. S. Steel’s president, CEO, and member of the board of directors, in a press release.
Steel industry analysts weighed in with their thoughts on the actual execution of a deal.
Timna Tanners, managing director of equity research at Wolfe Research, said a purchase by Cliffs would allow the Cleveland-based organization to grow. “The separate entities would otherwise see earnings shrink after abnormally strong 2021/22 steel prices,” she commented in a research note.
“If this merger concludes, I expect that Cliffs will continue to secure visibly higher profitability in this market and smooth out much of the cyclical peaks and valleys in the steel industry,” Josh Spoores, principal analyst at CRU, told SMU.
Additionally, “The proforma company would have the advantage of complementary capabilities in iron ore, DRI, scrap, and integrated/EAF steelmaking,” according to a research note from Phil Gibbs, senior equity research analyst at KeyBanc Capital Markets.
While the acquisition of U.S. Steel could be an advantageous move for Cliffs, regulations may be an obstacle.
Though Cliffs said it would get regulatory approval, Tanners thinks that dominance in the US automotive-quality, appliance, and tin sheet steel supply would elicit antitrust concerns.
Gibbs also said that regulatory issues would likely be problematic, but believes Cliffs has taken that into consideration.
“We believe the probability of this deal closing is low without meaningful concessions,” Gibbs noted.
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/2023/04/becca-moczygemba-150x150.png)
Becca Moczygemba
Read more from Becca MoczygembaLatest in Steel Mills
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/images/Featured_News_Icons/Nucor.png)
Nucor lowers 2024 output estimate for Brandenburg plate mill
Nucor has lowered the 2024 production estimate for its Brandenburg, Ky., plate mill due to soft market conditions.
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/images/Featured_News_Icons/SSAB.png)
SSAB adjusts output in weak Q3, readies for Q4 rebound
SSAB said lower plate prices in the US were the primary reason for reduced results in the second quarter. With a dismal Q3 outlook, the Swedish steelmaker is adjusting production across its facilities. That includes moving up its annual US mill outage in anticipation of a better Q4. SSAB Americas Revenues in the Americas segment […]
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/images/Featured_News_Icons/Nucor.png)
Topalian puts focus on “unfair” trade, eyes USMCA partners
Nucor’s top executive expressed concerns over unfair trade practices, highlighting increased steel imports from Mexico and Canada.
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/images/Featured_News_Icons/Cliffs_logo2.2.png)
Cliffs sees close of Stelco buy, bottom to steel tags, and Mexico out of USMCA
Cleveland-Cliffs expects its acquisition of Canada’s Stelco to close later this year, which will help the the Cleveland-based steelmaker as a bottom to steel tags nears.
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/images/Featured_News_Icons/Nucor.png)
Nucor posts lower Q2 earnings, predicts tough Q3 too
Nucor recording lower second quarter earnings on falling steel prices. And the Charlotte, N.C.-based predicted that profits would be lower still in the third quarter, primarily because of weaker results from its steel mills divisions.