Cleveland-Cliffs Inc. (NYSE: CLF) (“Cleveland-Cliffs” or
“Cliffs”) today announced receipt of the assignment of the United
Steelworkers’ (USW) right to bid under their Basic Labor Agreement
with United States Steel Corporation (NYSE:X) (“U.S. Steel”). With
this exclusive assignment, Cliffs is the only realistic buyer able
to acquire the totality of U.S. Steel. Furthermore, Cliffs has
agreed to assume, upon closing of a transaction, all of the
agreements between U.S. Steel and the USW that are applicable to
the U.S. Steel employees.
Under the terms of the USW’s collective bargaining agreement
with U.S. Steel, a potential sale of the whole company or
USW-represented assets could not be consummated without the support
of the USW. The assignment transfers to Cliffs the USW’s right to
bid on such potential transactions. The USW’s transfer and
assignment only applies to Cliffs.
Lourenco Goncalves, Cliffs’ Chairman, President and Chief
Executive Officer said: “I want to thank Tom Conway for working as
a true partner with me. I also want to say to the employees of U.S.
Steel who are watching this all unfold: I have your back.”
The full text of the letter from the USW to Cleveland-Cliffs is
included below:
Dear Mr. Goncalves:
Cleveland-Cliffs Inc. (Cleveland-Cliffs) announced on August 13,
2023 that it had presented to the board of directors of U.S. Steel
Corporation (U.S. Steel) a proposal to acquire 100% of the
outstanding stock of U.S. Steel. U.S. Steel later announced that it
has initiated a formal review process to evaluate strategic
alternatives.
The Union’s Basic Labor Agreement (BLA) with U.S. Steel includes
at Article Eleven, Section D a Right to Bid on a transaction
involving U.S. Steel, and grants the Union, at Paragraph 7 of
Article Eleven, Section D, the right to transfer or assign its
rights to another person or entity. By this letter, the Union
transfers and assigns to Cleveland-Cliffs the Union’s Right to Bid.
The Union’s transfer and assignment only applies to
Cleveland-Cliffs. I will inform you in writing if anything should
change regarding this transfer and assignment.
Further, the parties agree that upon closing, Cleveland-Cliffs
shall assume all of the agreements between U.S. Steel and the Union
that are applicable to the U.S. Steel Employees that the Union
represents and that Cleveland-Cliffs shall honor the commitments
contained in those agreements. Please sign below to acknowledge the
assumption of those agreements.
Very truly yours, Thomas M. Conway International President
A copy of the signed letter and other relevant materials have
been posted to the Cliffs’ website at www.clevelandcliffs.com.
Moelis & Company LLC, Wells Fargo, J.P. Morgan, UBS, MUFG
and Truist Securities are acting as financial advisors to
Cleveland-Cliffs and Davis Polk & Wardwell LLP is serving as
legal counsel.
About Cleveland-Cliffs Inc.
Cleveland-Cliffs is the largest flat-rolled steel producer in
North America. Founded in 1847 as a mine operator, Cliffs also is
the largest manufacturer of iron ore pellets in North America. The
Company is vertically integrated from mined raw materials, direct
reduced iron, and ferrous scrap to primary steelmaking and
downstream finishing, stamping, tooling, and tubing.
Cleveland-Cliffs is the largest supplier of steel to the automotive
industry in North America and serves a diverse range of other
markets due to its comprehensive offering of flat-rolled steel
products. Headquartered in Cleveland, Ohio, Cleveland-Cliffs
employs approximately 27,000 people across its operations in the
United States and Canada.
Forward-Looking Statements
This release contains statements that constitute
"forward-looking statements" within the meaning of the federal
securities laws. All statements other than historical facts,
including, without limitation, statements regarding our current
expectations, estimates and projections about our industry, our
business or a transaction with United States Steel Corporation
(U.S. Steel), are forward-looking statements. We caution investors
that any forward-looking statements are subject to risks and
uncertainties that may cause actual results and future trends to
differ materially from those matters expressed in or implied by
such forward-looking statements. Investors are cautioned not to
place undue reliance on forward-looking statements. Among the risks
and uncertainties that could cause actual results to differ from
those described in forward-looking statements are the following:
the risk that a transaction with U.S. Steel may not be consummated;
the risk that a transaction with U.S. Steel may be less accretive
than expected, or may be dilutive, to Cliffs’ earnings per share,
which may negatively affect the market price of Cliffs common
shares; the possibility that Cliffs and U.S. Steel will incur
significant transaction and other costs in connection with a
potential transaction, which may be in excess of those anticipated
by Cliffs; the risk that the financing transactions to be
undertaken in connection with a transaction have a negative impact
on the combined company’s credit profile or financial condition;
the risk that Cliffs may fail to realize the benefits expected from
a transaction; the risk that the combined company may be unable to
achieve anticipated synergies or that it may take longer than
expected to achieve those synergies; the risk that any
announcements relating to, or the completion of, a transaction
could have adverse effects on the market price of Cliffs common
shares; and the risk related to any unforeseen liability and future
capital expenditure of Cliffs related to a transaction.
For additional factors affecting the business of Cliffs, refer
to Part I – Item 1A. Risk Factors of our Annual Report on Form 10-K
for the year ended December 31, 2022, and other filings with the
U.S. Securities and Exchange Commission.
Important Information for Investors and Stockholders
This communication relates to a proposal which Cliffs has made
for an acquisition of U.S. Steel. In furtherance of this proposal
and subject to future developments, Cliffs may file one or more
registration statements, proxy statements, tender offer statements
or other documents with the Securities and Exchange Commission
(“SEC”). This communication is not a substitute for any proxy
statement, registration statement, tender offer statement or other
document Cliffs may file with the SEC in connection with the
proposed transaction.
Investors and security holders of Cliffs are urged to read the
proxy statement(s), registration statement, tender offer statement
and/or other documents filed with the SEC carefully in their
entirety if and when they become available as they will contain
important information about the proposed transaction. Any
definitive proxy statement(s) (if and when available) will be
mailed to stockholders of Cliffs, as applicable. Investors and
security holders will be able to obtain free copies of these
documents (if and when available) and other documents filed with
the SEC by Cliffs through the website maintained by the SEC at
http://www.sec.gov.
This document shall not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there be
any sale of securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any jurisdiction. No
offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the Securities
Act of 1933, as amended.
This communication is neither a solicitation of a proxy nor a
substitute for any proxy statement or other filing that may be made
with the SEC. Nonetheless, Cliffs and its directors and certain of
its executive officers may be considered participants in the
solicitation of proxies in connection with the proposed
transaction. Information about the directors and executive officers
of Cliffs is set forth in its Annual Report on Form 10-K for the
year ended December 31, 2022, which was filed with the SEC on
February 14, 2023, and its proxy statement for its 2023 annual
meeting of shareholders, which was filed with the SEC on April 3,
2023.
Any information concerning U.S. Steel contained in this filing
has been taken from, or based upon, publicly available information.
Although Cliffs does not have any information that would indicate
that any information contained in this filing that has been taken
from such documents is inaccurate or incomplete, Cliffs does not
take any responsibility for the accuracy or completeness of such
information. To date, Cliffs has not had access to the books and
records of U.S. Steel.
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MEDIA CONTACT: Patricia Persico Senior Director,
Corporate Communications (216) 694-5316
INVESTOR CONTACT: James Kerr Manager, Investor Relations
(216) 694-7719
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