US Steel says the union cannot prevent the sale of the company

(Reuters) – US Steel (XN) said on Thursday that its labor agreement with United Steel Workers (USW) does not give the union the right to veto a sale of the company that could arise from the strategic review it recently announced.

US Steel’s statement came after the USW said this week that it would only support Cleveland-Cliffs Inc (CLF.N) as a claimant to the company. “Over the years, Cleves has proven itself to be an outstanding employer for all of its workers,” the union said.

US Steel, which rejected Cliffs’ $7.8 billion cash and stock offer as insufficient, said it was exploring “several unsolicited proposals.” It has attracted an all-cash offer of $7.8 billion from Esmark Inc as well as a potential acquisition interest from ArcelorMittal SA (MT.LU).

In a regulatory filing, US Steel said its agreement with the union gives the latter the right to counter its takeover bid for assets covered under their negotiation agreement. If the syndicate does not submit a bid that its board of directors deems to be superior, US Steel can sell itself to the bidder of its choosing.

USW representatives did not immediately respond to a request for comment.

The union has transferred its right to oppose US Steel’s assets to Cliffs, which disclosed the arrangement Thursday in a statement. It was not immediately clear if this had any impact on the outcome of the bidding process, given that Cliffs was already involved in it.

In a presentation on its website, Cleaves said the union’s labor agreement with US Steel constituted “a practical veto” on a deal. He cited the requirement that the buyer reach a labor agreement with the union before the deal could be completed as a way for the union to stop the sale of the business.

Cleaves also said Thursday that it had agreed to keep all arrangements between American Iron and Steel and unionized workers, should its bid win.

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