U.S. Steel shares extend decline after Esmark scraps takeover bid

Investing.com -- Shares in United States Steel Corporation (NYSE:X) dropped in premarket trading on Wall Street Thursday, extending losses from the previous session that were sparked by a decision by privately held Esmark to scrap its pursuit of a takeover of the historic alloy producer.

Esmark's announcement, a reversal of its $35-per-share cash offer for U.S. Steel made last week, comes as the company faces pressure from the United Steelworkers (USW) union, which supports a bid from rival Cleveland-Cliffs (NYSE:CLF). In a statement, Esmark, a non-union shop, said that it would respect the USW's position.

Cleveland-Cliffs has also submitted an unsolicited $35-a-share cash-and-stock bid that valued U.S. Steel at over $7 billion. U.S. Steel rejected the offer, kickstarting an auction process that included multiple possible suitors. ArcelorMittal (NYSE:MT), the world's second-biggest steelmaker, is also reportedly one of these bidders.

But the USW has said it is willing to use its contractual powers to block any attempts by any companies besides Cleveland-Cliffs to acquire U.S. Steel.

If the Cleveland-Cliffs deal eventually does come to pass, the purchase would alter the landscape of America's domestic steel industry, creating a national champion with control over much of America's ore supply and sheet steel output. However, it would need to be approved by regulators in Washington who have shown skepticism recently over major corporate tie-ups.