ArcelorMittal Considers Potential Offer for U.S. Steel Corp: Sources

ArcelorMittal, the world’s second-largest steelmaker and a major supplier to the auto industry, is considering a potential offer for U.S. Steel Corp., according to sources familiar with the matter.

ArcelorMittal is currently discussing this possible offer with its investment bankers, but there is no guarantee that it will proceed with it.

If a bid is made, it could escalate the ongoing bidding war for U.S. Steel, which has already received offers from Cleveland-Cliffs Inc. and Esmark Inc., each worth over $7 billion.

A takeover of U.S. Steel by another steelmaker could have significant implications for U.S. automakers that rely on these companies as suppliers.

The sources have requested anonymity as the deliberations are confidential. Representatives for ArcelorMittal and U.S. Steel have not yet responded to requests for comment.

U.S. Steel shares rose following the news, while bids from Cleveland-Cliffs and Esmark were both priced at $35 per share. Esmark’s offer is all cash, while Cleveland-Cliffs would pay for the deal with a combination of cash and stock.

ArcelorMittal’s consideration comes after U.S. Steel announced its exploration of potential acquirers. The United Steelworkers union supports Cleveland-Cliffs’ bid, although U.S. Steel has rejected it as “unreasonable.”

U.S. Steel has become an acquisition target due to declining revenue and profits over several quarters, primarily driven by high raw material and energy costs.

Like its competitors, ArcelorMittal has also been facing a slowdown in demand amidst global economic growth deceleration. The company reported a second-quarter profit of $2.6 billion, half of what it made the previous year.

ArcelorMittal expects global steel demand, excluding China, to grow 1-2 percent this year, down from its previous forecast of 2-3 percent, citing higher U.S. interest rates and weak construction activity in Europe as contributing factors.