Image source: United States Steel

United States Steel Corporation (NYSE: X) opened more than 25% up this morning after rejecting a takeover bid from peer Cleveland-Cliffs Inc (NYSE: CLF).

U.S. Steel dubs the bid ‘unreasonable’

This past weekend, the largest North American producer of flat-rolled steel proposed to buy U.S. Steel for $17.50 per share in cash.

Cleveland also said that it will replace each share of the Pittsburgh-headquartered firm with 1.023 of its own shares on top of the cash payment. But U.S. Steel rejected the bid today and said:

Our Board could not, consistent with its fiduciary duties, agree to a proposal of which 50% is represented by your stock without conducting a thorough and customary due diligence process.

The said proposal valued U.S. Steel that’s still down nearly 10% versus its year-to-date high at about $7.3 billion.

U.S. Steel is evaluating its strategic options

On Monday, the New York-listed firm also confirmed that it has received a bunch of offers aimed either at parts of its business or all of it. Its board is now evaluating the available strategic options, as per the press release.

The U.S. Steel Board remains committed to maximising value for stockholders, and to that end, has decided to initiate a formal review process to evaluate strategic alternatives.

The stock market news arrives a couple of weeks after U.S. Steel reported its financial results for the second quarter that handily topped Street estimates.

Wall Street currently has a consensus “hold” rating on the steel stock that’s now trading well above its average price target.  

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