United States Steel Corp. and Cleveland-Cliffs Inc. exchanged blows via regulatory filings that wrangled over the rights of the United Steelworkers to bid for the iconic American steelmaker following a “bona fide” takeover offer.
(Bloomberg) — United States Steel Corp. and Cleveland-Cliffs Inc. exchanged blows via regulatory filings that wrangled over the rights of the United Steelworkers to bid for the iconic American steelmaker following a “bona fide” takeover offer.
US Steel said Tuesday in a filing that it sent a letter to its union workers regarding the strategic review process announced earlier this month, informing them of rights previously outlined in a labor contract signed a year ago. Hours later, Cliffs — which is behind a $7.3 billion bid to buy the Pittsburgh-based producer — submitted a filing indicating it send US Steel a letter saying the company is obliged to inform the steelworkers and Cliffs of any proposals received.
The role that the United Steelworkers union has on any potential transaction for US Steel is at the heart of Tuesday’s filings to the US Securities and Exchange Commission. The union plays a pivotal part in any transaction that involves the sale of any US Steel mills or assets where the steelworkers are employed.
USW President Tom Conway told Bloomberg News in an interview last week that the union only endorses Cliffs’ bid for the iconic steelmaker. Those comments prompted US Steel to file a statement that said the union doesn’t have the right to “veto” any transaction that may result from the company’s strategic review. As part of that statement, US Steel included last year’s labor pact with the USW.
Read More: Steelworkers Say Cliffs Can Bid for US Steel on Its Behalf
The contract says any potential buyer of the company or assets that include union steelworkers in its workforce must enter into an agreement with the union “recognizing it as the bargaining representative for the employees working at the plant(s) to be sold.” If the company is presented with a “bona fide offer,” it will provide the union the earliest practical notification and grant the USW “the right to organize a transaction to purchase the assets.”
At that point, US Steel will provide the union with 45 days to submit an offer for the assets. The company is under no obligation to accept, the contract says, but it cannot enter into an agreement unless the deal is superior to the USW offer. Conway said last Thursday that he advised US Steel and Cliffs that the United Steelworkers would transfer its legal right to launch a counteroffer for US Steel to Cliffs.
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