ArcelorMittal weighs possible bid for U.S. Steel, report says

ArcelorMittal, the world's second-largest steelmaker and a major supplier to the auto industry, is considering a potential offer for U.S. Steel Corp., three people familiar with the matter told Reuters on Wednesday.

ArcelorMittal is discussing a possible offer with its investment bankers, and there is no certainty that it will press ahead with it, the sources said.

If it does launch a bid, it could mark the escalation of a bidding war that is already underway for U.S. Steel, following offers from Cleveland-Cliffs Inc. and Esmark Inc for more than $7 billion.

A potential takeover of U.S. Steel by another steelmaker could have a significant impact on U.S. automaker customers of the companies. U.S. Steel has supplied North Amerian automakers for generations.

The sources requested anonymity because the deliberations are confidential. Representatives for ArcelorMittal and U.S. Steel did not immediately respond to requests for comment.

U.S. Steel shares were up 1.39 percent to $30.65 when the market closed Wednesday. That compares to bids from Cleveland-Cliffs and Esmark that were both worth $35 per share when submitted. Esmark's offer is all cash, while Cleveland-Cliffs would pay for the deal half with cash and half with its own stock.

ArcelorMittal's deliberations come after U.S. Steel said on Sunday it had launched a process to explore interest from potential acquirers. The United Steelworkers union supports Cleveland-Cliffs' bid, however U.S. Steel has rebuffed it as "unreasonable."

Steelworkers President Tom Conway on Wednesday called ArcelorMittal's bid consideration for U.S. Steel "foolish" and said the union wouldn't endorse any buyers other than Cleveland-Cliffs.

U.S. Steel became an acquisition target following several quarters of falling revenue and declining profits, as it struggled with high raw material and energy costs.

ArcelorMittal, like its peers, has also been grappling with a slowdown in demand, as global economic growth slows. Last month it reported a second-quarter profit of $2.6 billion, half that of a year ago.

ArcelorMittal has said that global steel demand excluding China is expected to grow 1-2 percent this year, down from a previously forecast range of 2-3 percent, due to higher U.S. interest rates and weak construction activity in Europe.