Topline
U.S. Steel—the company formed by J.P. Morgan, Andrew Carnegie and other titans of industry—said it is considering a sale Sunday after receiving unsolicited offers for the business that employs more than 22,700 people and is valued at $5 billion.
The Edgar Thomas Plant of the United States Steel Corporation in Braddock, Pennsylvania, on October … [+]
Key Facts
In a press release Sunday, the publicly traded United States Steel Corporation said it has launched a strategic review to consider selling all or part of the company after receiving offers that range from a full purchase to sales of individual production assets.
U.S. Steel, which operates three plants in southwestern Pennsylvania and has its corporate offices in the region, said it was taking a “measured approach” to the proposals and is “committed to maximizing value for our stockholders.”
President and CEO David Burritt last month said the company was “extremely well positioned for what we believe will be the best American steel market in a generation,” according to the Pittsburgh Post-Gazette, and in July U.S. Steel reported second quarter net earnings of $477 million.
The last decade has been touch-and-go for the producer, which saw combined losses of $1.8 billion in 2013 and 2015 before domestic steel prices bounced back and the company invested in “mini mills”—which melt steel scrap as opposed to creating it from raw iron ore and coke.
Shares of U.S. Steel have dropped more than 24% in the last five years and, while the company is expected to benefit from rising infrastructure spending and increased government incentives for U.S. manufacturing, it’s still trading well below the $38.50 recorded in March 2022.
The news of a potential sale comes just days after U.S. Steel announced it would partner with Google Cloud to use artificial intelligence technology at iron ore facilities in Minnesota.
There is no deadline for the review to be completed.
Key Background
U.S. Steel was founded in 1901 when J. P. Morgan financed the merging of steel companies owned by Andrew Carnegie, Elbery Gary and William Henry Moore. Charles M. Schwab was the first president of the company, which was once the largest steel producer in the world and was the first billion-dollar corporation. U.S. Steel remained the largest steel producer in the United States for much of the 20th century but by 1986 had acquired Marathon Oil Company and Texas Oil & Gas Corp., branching into the mining, construction and transportation industries. A holding company called the USX Corporation, now the Marathon Oil Corporation, was established and split into four operating units to manage the company’s diversified interests before U.S. Steel spun off in 2001. Today, U.S. Steel operates in 10 states and Slovakia and is in the top 25 steel production companies in the world. Recently, former President Donald Trump imposed tariffs on imported steel in an effort to support the ailing industry, a controversial move as economists feared higher prices would have a broader impact beyond the steel business. An initial spike in steel prices after the tariffs were announced was short-lived, though prices surged to new highs during the Covid-19 pandemic.
Tangent
U.S. Steel has plans to halt steel production at two furnaces in Illinois and sell them to SunCoke, which will create a production facility for pig iron. The sale will result in the loss of 1,000 jobs. The pending closure comes a few years after former Trump visited Granite City, Illinois and declared the facilities to be “blazing bright” as a result of his 25% duties on imported steel.
Further Reading
U. S. Steel Announces Strategic Alternatives Process (U.S. Steel)
Can U.S. Steel Stock Return To Pre-Inflation Shock Highs? (Forbes)
U.S. Steel Bets on a New Technology—and the South—to Survive (Bloomberg)
Steel Tariffs And Jobs: You Have To Look At The Whole Supply Chain (Forbes)
Source: https://www.forbes.com/sites/maryroeloffs/2023/08/13/us-steel-eyes-potential-sale-after-several-unsolicited-bids/