The U.S. Securities and Exchange Commission said that Esmark and its founder James P. Bouchard made a tender offer for US Steel last year, while knowing the company couldn’t finance the offer.
Esmark and Bouchard agreed to pay civil penalties of $500,000 and $100,000, respectively over the charges, according to a filing on Friday.
“Esmark and Bouchard violated Section 14(e) of the Exchange Act and Rule 14e-8 thereunder when they announced Esmark’s offer to purchase U.S. Steel for cash while lacking a reasonable belief that they would have the means to complete the offer,” the SEC said in a legal filing.
Esmark announced on Aug. 14, 2023, a $35 share, or $7.8 billion, bid for US Steel (X). The following day Bouchard appeared on CNBC and said that Esmark had no debt and $10 billion available in cash committed to the deal. A week later, Esmark dropped the bid.
As of August 31, 2023, Esmark had less than 1% of the required $7.8 billion in cash to complete the tender offer, according to the SEC filing.
“In reality, Esmark and Bouchard did not have the $7.8 billion in cash required to complete the purchase of U.S. Steel for $35 per share as it publicly projected,” the SEC said.
