ISS and Glass Lewis Recommendations Reiterate
that Transaction Delivers Clear Benefits to U. S. Steel
Shareholders
United States Steel Corporation (NYSE: X) (“U. S. Steel”) today
announced that leading independent proxy advisory firms
Institutional Shareholder Services (“ISS”) and Glass Lewis &
Co. (“Glass Lewis”) have recommended that U. S. Steel shareholders
vote “FOR” the pending transaction with Nippon Steel Corporation
(“NSC”) (TSE: 5401) at the upcoming special meeting on April 12,
2024.
In its March 27, 2024 report, ISS stated:
- “There is no doubt that the offer represents a meaningful
premium for shareholders resulting from a thorough and competitive
sales process. Ultimately, the board chose the certainty of value
inherent in an all-cash offer from NSC over a lower cash and stock
offer from [Cleveland-Cliffs [(“CLF”)] that, in the board’s view,
carried considerable risk in obtaining antitrust approval without
significant divestitures – which could in turn jeopardize whether
CLF shareholders would approve a potential transaction. The board’s
decision is defensible, particularly given the commitments from NSC
to obtain necessary regulatory approvals.”
- “The sales process was thorough, shareholders are receiving a
sizable premium, there is a potential downside risk of
non-approval, and there is certainty of value in NCS’s cash
offer.”
In its March 27, 2024 report, Glass Lewis stated:
- “… we believe the disclosed engagement framework and
functionally public solicitation effort appear to have been
suitably comprehensive and supportive of obtaining the greatest
possible value for USS shareholders.”
- “…we would highlight the following: (i) the deal-implied
trailing EBITDA multiple of 6.7x substantially exceeds the
Company's stand-alone valuation in the run-up to announcement
(approximately 2.55x as of August 11, 2023, trailing one-year
average of approximately 1.52x as of August 11, 2023); the
deal-implied forward EBITDA multiple of 8.2x substantially exceeds
the Company's stand-alone valuation in the run-up to announcement
(approximately 4.06x as of August 11, 2023, trailing one-year
average of approximately 3.28x as of August 11, 2023); (iii) the
deal-implied trailing EBITDA multiple of 6.7x falls between the
median and mean trailing EBITDA multiples derived by Barclays in
its review of precedent transactions (6.4x and 6.9x, respectively);
and (iv) in absolute terms, the proposed purchase price represents
a roughly twelve-year unaffected high for USS investors. Taken
together…we thus believe there exists persuasive cause to conclude
the proposed all-cash purchase price is attractive here.”
- “…as it relates to the political/regulatory element, we believe
USS has negotiated adequate procedural safeguards and remedies
intended to give the NSC deal the best possible opportunity of
securing necessary approvals…”
U. S. Steel issued the following statement in response:
“We are pleased that ISS and Glass Lewis support our Board’s
unanimous recommendation that shareholders vote “FOR” our pending
transaction with Nippon Steel. Through increased financial
investment and NSC’s contribution of advanced technologies, Nippon
Steel will advance American priorities by driving greater quality
and competitiveness for customers in the critical industries that
rely on American steel while strengthening American supply chains.
Importantly, U. S. Steel will retain its headquarters in
Pittsburgh, Pennsylvania and together with NSC will bolster and
grow U. S. Steel in the U.S. market in a way that prioritizes our
talented employees and union members. This transaction combines two
companies with world-leading technologies and manufacturing
capabilities to better serve our customers in the United States and
globally and provide our shareholders with the opportunity to
realize certain and immediate value at a 142% premium compared to
the last day of trading before the strategic alternatives process
was announced.”
U. S. Steel shareholders of record at the close of business on
March 4, 2024 will be entitled to vote at the special meeting,
including by submitting a proxy in advance of the meeting.
U. S. Steel shareholders who need assistance in completing the
proxy card, need additional copies of the proxy materials or have
questions regarding the upcoming special meeting should contact U.
S. Steel’s proxy solicitor:
Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor New York, NY
10022 Toll Free: (877) 825-8621 (from the U.S. and Canada) or (412)
232-3651 (from other locations)
Barclays Capital Inc., Goldman Sachs & Co. LLC and Evercore
are serving as financial advisors to U. S. Steel. Milbank LLP and
Wachtell, Lipton, Rosen & Katz are acting as legal
advisors.
About U. S. Steel
Founded in 1901, United States Steel Corporation is a leading
steel producer. With an unwavering focus on safety, the Company’s
customer-centric Best for All® strategy is advancing a more secure,
sustainable future for U. S. Steel and its stakeholders. With a
renewed emphasis on innovation, U. S. Steel serves the automotive,
construction, appliance, energy, containers, and packaging
industries with high value-added steel products such as U. S.
Steel’s proprietary XG3® advanced high-strength steel. The Company
also maintains competitively advantaged iron ore production and has
an annual raw steelmaking capability of 22.4 million net tons. U.
S. Steel is headquartered in Pittsburgh, Pennsylvania, with
world-class operations across the United States and in Central
Europe. For more information, please visit www.ussteel.com.
Additional Information and Where to Find It
This communication relates to the proposed transaction between
the United States Steel Corporation (the “Company”) and Nippon
Steel Corporation (“NSC”). In connection with the proposed
transaction, the Company has filed and will file relevant materials
with the United States Securities and Exchange Commission (“SEC”),
including the Company’s proxy statement on Schedule 14A (the “Proxy
Statement”), a definitive version of which was filed with the SEC
on March 12, 2024. The Company commenced disseminating the
definitive Proxy Statement to stockholders of the Company on or
about March 12, 2024. The Company may also file other documents
with the SEC regarding the proposed transaction. This communication
is not a substitute for the Proxy Statement or for any other
document that may be filed with the SEC in connection with the
proposed transaction. The proposed transaction will be submitted to
the Company’s stockholders for their consideration. BEFORE MAKING
ANY VOTING DECISION, THE COMPANY’S STOCKHOLDERS ARE URGED TO READ
ALL RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SEC, INCLUDING
THE PROXY STATEMENT (A DEFINITIVE FILING OF WHICH HAS BEEN MADE
WITH THE SEC), AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE
DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY IF AND WHEN THEY BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE
COMPANY, NSC AND THE PROPOSED TRANSACTION.
The Company’s stockholders will be able to obtain free copies of
the definitive Proxy Statement, as well as other documents
containing important information about the Company, NSC and the
proposed transaction once such documents are filed with the SEC,
without charge, at the SEC’s website (www.sec.gov). Copies of the
Proxy Statement and the other documents filed with the SEC by the
Company can also be obtained, without charge, by directing a
request to United States Steel Corporation, 600 Grant Street, Suite
1884, Pittsburgh, Pennsylvania 15219, Attention: Corporate
Secretary; telephone 412-433-1121, or from the Company’s website
www.ussteel.com.
Participants in the Solicitation
NSC, the Company and their directors, and certain of their
executive officers and employees may be deemed to be participants
in the solicitation of proxies from the Company’s stockholders in
respect of the proposed transaction. Information regarding the
directors and executive officers of the Company who may, under the
rules of the SEC, be deemed participants in the solicitation of the
Company’s stockholders in connection with the proposed transaction,
including a description of their direct or indirect interests, by
security holdings or otherwise, is set forth in the Proxy
Statement, a definitive version of which was filed with the SEC on
March 12, 2024. Information about these persons is included in each
company’s annual proxy statement and in other documents
subsequently filed with the SEC, and was included in the definitive
version of the Proxy Statement filed with the SEC. Free copies of
the Proxy Statement and such other materials may be obtained as
described in the preceding paragraph.
Forward-Looking Statements
This communication contains information regarding the Company
and NSC that may constitute “forward-looking statements,” as that
term is defined under the Private Securities Litigation Reform Act
of 1995 and other securities laws, that are subject to risks and
uncertainties. We intend the forward-looking statements to be
covered by the safe harbor provisions for forward-looking
statements in those sections. Generally, we have identified such
forward-looking statements by using the words “believe,” “expect,”
“intend,” “estimate,” “anticipate,” “project,” “target,”
“forecast,” “aim,” “should,” “plan,” “goal,” “future,” “will,”
“may” and similar expressions or by using future dates in
connection with any discussion of, among other things, statements
expressing general views about future operating or financial
results, operating or financial performance, trends, events or
developments that we expect or anticipate will occur in the future,
anticipated cost savings, potential capital and operational cash
improvements and changes in the global economic environment, the
construction or operation of new or existing facilities or
capabilities, statements regarding our greenhouse gas emissions
reduction goals, as well as statements regarding the proposed
transaction, including the timing of the completion of the
transaction. However, the absence of these words or similar
expressions does not mean that a statement is not forward-looking.
Forward-looking statements include all statements that are not
historical facts, but instead represent only the Company’s beliefs
regarding future goals, plans and expectations about our prospects
for the future and other events, many of which, by their nature,
are inherently uncertain and outside of the Company’s or NSC’s
control. It is possible that the Company’s or NSC’s actual results
and financial condition may differ, possibly materially, from the
anticipated results and financial condition indicated in these
forward-looking statements. Management of the Company or NSC, as
applicable, believes that these forward-looking statements are
reasonable as of the time made. However, caution should be taken
not to place undue reliance on any such forward-looking statements
because such statements speak only as of the date when made. In
addition, forward looking statements are subject to certain risks
and uncertainties that could cause actual results to differ
materially from the Company’s or NSC’s historical experience and
our present expectations or projections. Risks and uncertainties
include without limitation: the ability of the parties to
consummate the proposed transaction on a timely basis or at all;
the timing, receipt and terms and conditions of any required
governmental and regulatory approvals of the proposed transaction;
the occurrence of any event, change or other circumstances that
could give rise to the termination of the definitive agreement and
plan of merger relating to the proposed transaction (the “Merger
Agreement”); the possibility that the Company’s stockholders may
not approve the proposed transaction; the risks and uncertainties
related to securing the necessary stockholder approval; the risk
that the parties to the Merger Agreement may not be able to satisfy
the conditions to the proposed transaction in a timely manner or at
all; risks related to disruption of management time from ongoing
business operations due to the proposed transaction; certain
restrictions during the pendency of the proposed transaction that
may impact the Company’s ability to pursue certain business
opportunities or strategic transactions; the risk that any
announcements relating to the proposed transaction could have
adverse effects on the market price of the Company’s common stock
or NSC’s common stock or American Depositary Receipts; the risk of
any unexpected costs or expenses resulting from the proposed
transaction; the risk of any litigation relating to the proposed
transaction; the risk that the proposed transaction and its
announcement could have an adverse effect on the ability of the
Company or NSC to retain customers and retain and hire key
personnel and maintain relationships with customers, suppliers,
employees, stockholders and other business relationships and on its
operating results and business generally; and the risk the pending
proposed transaction could distract management of the Company. The
Company directs readers to its Quarterly Report on Form 10-Q for
the quarter ended September 30, 2023 and Form 10-K for the year
ended December 31, 2023, and the other documents it files with the
SEC for other risks associated with the Company’s future
performance. These documents contain and identify important factors
that could cause actual results to differ materially from those
contained in the forward-looking statements. Risks related to NSC’s
forward-looking statements include, but are not limited to, changes
in regional and global macroeconomic conditions, particularly in
Japan, China and the United States; excess capacity and oversupply
in the steel industry; unfair trade and pricing practices in NSC’s
regional markets; the possibility of low steel prices or excess
iron ore supply; the possibility of significant increases in market
prices of essential raw materials; the possibility of depreciation
of the value of the Japanese yen against the U.S. dollar and other
major foreign currencies; the loss of market share to substitute
materials; NSC’s ability to reduce costs and improve operating
efficiency; the possibility of not completing planned alliances,
acquisitions or investments, or such alliances, acquisitions or
investments not having the anticipated results; natural disasters
and accidents or unpredictable events which may disrupt NSC’s
supply chain as well as other events that may negatively impact
NSC’s business activities; risks relating to CO2 emissions and
NSC’s challenge for carbon neutrality; the economic, political,
social and legal uncertainty of doing business in emerging
economies; the possibility of incurring expenses resulting from any
defects in our products or incurring additional costs and
reputational harm due to product defects of other steel
manufacturers; the possibility that we may be unable to protect our
intellectual property rights or face intellectual property
infringement claims by third parties; changes in laws and
regulations of countries where we operate, including trade laws and
tariffs, as well as tax, environmental, health and safety laws; and
the possibility of damage to our reputation and business due to
data breaches and data theft. All information in this communication
is as of the date above. Neither the Company nor NSC undertakes any
duty to update any forward-looking statement to conform the
statement to actual results or changes in the Company’s or NSC’s
expectations whether as a result of new information, future events
or otherwise, except as required by law.
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version on businesswire.com: https://www.businesswire.com/news/home/20240329957310/en/
Media Contacts: Tara Carraro Senior Vice
President, Chief Communications Officer, U. S. Steel T-
412-433-1300 E- media@uss.com
Kelly Sullivan / Ed Trissel Joele Frank, Wilkinson
Brimmer Katcher T- 212-895-8600
Emily Chieng Investor Relations Officer, U. S. Steel T –
(412) 618-9554 E – ecchieng@uss.com
Scott Winter / Gabrielle Wolf Innisfree M&A
Incorporated T - 212.750.5833
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