A contractor guides a steel beam into place while working on the Korean Air Lines Co. Wilshire Grand hotel and office building in downtown Los Angeles, California.
Patrick T. Fallon | Bloomberg | Getty Images
U.S. Steel shares rose 3.08% on the news. The company’s stock closed Tuesday at $36.39 a share.
The sale process started in August when rival Cleveland Cliffs made an unsolicited bid of $7.3 billion. U.S. Steel rejected that offer.
CNBC previously reported the U.S. steel has attracted five bidders, including ArcelorMittal.
U.S. Steel’s board is meeting Wednesday, the sources said. The sale process is coming to a conclusion, but this does not mean there will be an announcement of the outcome tomorrow morning.
Cleveland Cliffs‘ current bid is above $40 a share which is higher than its original offer of $35 a share made last summer, the sources said.
The composition of Cleveland Cliffs’ original bid was $17.50 in cash per share and the rest in stock. The current bid has a similar composition though it may be weighted more toward cash, the sources said.
Cleveland-Cliffs is expected to structure its bid to mitigate the risk of anti-trust review. This could potentially include a reverse termination fee or a divestiture package, though nothing is certain.
If Cleveland-Cliffs prevails, its combination with U.S. Steel would account for 40% of flat-rolled steel and 60% of auto-grade steel in the U.S. The combined company would be the tenth largest steel producer worldwide.
The details of ArcelorMittal’s bid is less clear, though the company apparently had financing that would have allowed them to offer $45 a share in all cash.