Shares of US Steel soared Monday on news that rival Cleveland-Cliffs has proposed a purchase of the company, a move that would create the nation's largest steelmaker.

US Steel said it has rejected the proposal but Cleveland-Cliffs, which is already the nation's No. 2 steelmaker behind Nucor, said it will continue to pursue the deal.

Cleveland-Cliffs proposes paying $17.50 a share in cash, and 1.023 shares of Cliffs stock for each US Steel share. Based on Friday's closing price, that would be worth $32.53 for each US Steel share, an increase of 43% from US Steel's Friday closing price. Shares of US Steel are up 26% in early trading Monday.

US Steel said Sunday that it has received "multiple unsolicited proposals" ranging from the acquisition of certain production assets to a purchase of the whole company and that it started a strategic review of its options.

US Steel said that it had been in discussion with Cleveland-Cliffs about its offer, but that those private talks broke down Friday with Cleveland-Cliffs' refusal to sign a nondisclosure agreement, or NDA, that would allow the two companies to exchange financial information.

US Steel said Cleveland-Cliffs demanded it agree to the proposed economic terms of the deal in advance. US Steel said it needed the NDA to evaluate the value of the stock that Cleveland-Cliffs was proposing to use in the purchase before it could agree to the terms.

Cleveland Cliffs said that it still believes it can do the deal, despite US Steel's rejection.

"Although we are now public, I do look forward to continuing to engage with US Steel on a potential transaction," said Cleveland-Cliffs CEO Lourenco Goncalves in a statement Sunday.

Despite creating a new industry leader, Cleveland-Cliffs said it believes it would be able to win anti-trust approval of the deal.

It also released a letter Sunday from the United Steelworkers union, which represents 25,000 workers between the two companies, that endorsed the proposed deal. Under its contract with US Steel, the USW has the right to make a counteroffer for an employee buyout of US Steel should it receive a purchase offer. Its letter said it will not exercise that right should Cleveland-Cliffs purchase the company, and that it would oppose any other potential purchase offer for US Steel.

Cleveland-Cliffs produced 16.8 million tons of steel in 2022, while US Steel produced 11.2 million tons at its US operations and another 3.7 million tons in Europe. Nucor produced 21 million tons, according to industry rankings and company reports.

Cleveland-Cliffs and US Steel are the two US steelmakers that make most of their steel from raw materials, while Nucor makes its steel primarily from melting steel scrap to produce steel. Cleveland-Cliffs and US Steel are the only two major unionized companies in the US steel industry.