What happened
Shares of iconic steelmaker United States Steel (X 0.67%) soared Monday after the company revealed over the weekend that it was undertaking a review of strategic alternatives. The decision came after the company said it received several unsolicited proposals for portions of its production assets as well as at least one to purchase the whole company.
The market reacted by sending shares higher by 32.9% as of 1:15 p.m. ET.
So what
In a statement the company said, "U. S. Steel does not intend to make any further public comment regarding the review of strategic alternatives until it has been completed or the Company determines that a disclosure is required by law or otherwise deemed appropriate."
But that prompted another public statement from the CEO of rival Cleveland-Cliffs, Lourenco Goncalves, that provided details on a proposal his company made to acquire U.S. Steel. And that's what had investors charged up.
Now what
Cliffs made public that it made a 50% cash, 50% stock offer for its rival valued at $35 per share. That represents a 54% premium over where U.S. Steel shares closed Friday. U.S. Steel's board of directors rejected the offer as being "unreasonable" and said it would commence a formal review process to consider other bids for either portions or all of its business.
A combination of the two large domestic steelmakers would provide the majority of the automotive flat-rolled steel supply in the U.S. and would dominate domestic iron ore production.
There will certainly be more information to come, but the potential consolidation in the domestic steel industry led many steelmakers' shares higher Monday, with U.S. Steel leading the way.
