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Business News/ Companies / News/  US Steel proposes new offer to ArcelorMittal, may reverse retreat from US: Report
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US Steel proposes new offer to ArcelorMittal, may reverse retreat from US: Report

ArcelorMittal considering a new offer from US Steel Corp, which could reverse its retreat from the US.

ArcelorMittal's US footprint is currently limited to a joint venture with Nippon Steel CorpPremium
ArcelorMittal's US footprint is currently limited to a joint venture with Nippon Steel Corp

Indian steel magnate Lakshmi Mittal's company ArcelorMittal SA may not have to retreat from the US as US Steel Corp has reportedly proposed a new offer to the company. According to a report by Reuters, ArcelorMittal, which is the world's second-largest steelmaker, is also considering the offer by US Steel. Mittal is discussing a possible offer with its investment bankers, and there is no certainty that it will press ahead with it, Reuters mentioned adding sources. Mint could not independently confirm this matter.

If a deal between ArcelorMittal and US Steel pans out successfully then it would reverse the former's retreat from America as a production base. Notably, in 2020, ArcelorMittal sold most of its operations to Cleveland-Cliffs Inc for $1.4 billion to focus on growing markets such as India and Brazil.

However, US Steel workers are members of the United Steel Workers (USW) union, which has come out in support of a deal with Cleveland-Cliffs even though US STeel Corp has rebuffed that offer as "unreasonable."

USW International President Tom Conway told Reuters ArcelorMittal would be "foolish" to move ahead with a bid. He said he was unhappy with how ArcelorMittal has treated workers in the past, without elaborating. Conway suggested that the United Steel Workers union would not endorse any buyers other than Cleveland-Cliffs.

ArcelorMittal's deliberations come after US Steel said on Sunday it had launched a process to explore interest from potential acquirers. At present, US Steel's balance sheet is not healthy as the company's revenue and profits have continued to decline for the past several quarters as it grapples with high raw material and energy costs.

ArcelorMittal is also witnessing a slowdown in demand as global economic growth slows. Last month it reported a second-quarter profit of $2.6 billion, half that of a year ago.

ArcelorMittal's US footprint is currently limited to a joint venture with Nippon Steel Corp in Alabama. They own a plant that produces steel sheet products by processing semi-finished products, or slabs, procured from local and overseas suppliers. They are also investing about $1 billion in an electric arc furnace.

Meanwhile, Morgan Stanley analysts have found that ArcelorMittal's US Steel bid deliberations are at odds with its strategy of reducing its carbon footprint. "We also see limited scope for cost synergies from such a deal," the analysts said in a note yesterday.

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Published: 17 Aug 2023, 06:49 AM IST
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