Cleveland-Cliffs Signals A Possible New Bid For U.S. Steel
A possible new takeover bid for U.S. Steel emerged on Monday, teeing up more turmoil over the once-dominant company’s future after President Biden’s decision to block its acquisition by a Japanese company.
Lourenco Goncalves, the chief executive of an American competitor, Cleveland-Cliffs, said his company had “an All-American solution to save the United States Steel Corporation,” stressing that acquiring U.S. Steel was a matter of “when,” not “if.” But he offered no details of the bidding plans.
The renewed expression of interest from Cleveland-Cliffs comes less than two weeks after Mr. Biden blocked a $14 billion takeover of U.S. Steel by Nippon Steel, arguing that the sale posed a threat to national security. Cleveland-Cliffs made an offer to buy U.S. Steel by 2023. This was rejected because Nippon Steel’s bid was higher. At a later news conference, Mr. Goncalves refused to confirm a partnership with Nucor.
U.S. Steel and Nucor did not immediately respond to requests for comment.
Investors seemed pleased by the potential bid, sending shares of U.S. Steel up as much as 10 percent on Monday when CNBC reported the potential offer. U.S. Steel shares finished up about 6 percent on Monday, but are down 23 per cent over the last year. This spike included. U.S. Steel and Nippon sued the United States government last week in the hopes of reviving their merger, accusing Mr. Biden and other senior administration officials of corrupting the review process for political gain and blocking the deal under false pretenses.
The companies filed a separate lawsuit against Cleveland-Cliffs, Mr. Goncalves and David McCall, international president of the United Steelworkers union. They argue that Cleveland-Cliffs and the head of the union illegally colluded to undermine the Nippon deal, assertions that both defendants called “baseless.”
On Saturday, the companies said the Biden administration had delayed enforcement of its executive order blocking Nippon’s takeover until June, to give the courts time to review the lawsuit.
“The problem is, we can’t make anything happen until the current management and the current board of U.S. Steel make the decision to abandon the merger agreement with Nippon Steel,” Mr. Goncalves said at a news conference in Butler, Pa., on Monday. It is unclear whether U.S. Steel will accept a new offer from Cleveland-Cliffs, given the current rift. If U.S. Steel does not engage, one option would be for Cleveland-Cliffs to take an offer to shareholders.
U.S. Steel was once the largest steel producer in the world, but it has dropped in the global rankings over the past few years. U.S. Steel has argued that Nippon is the only buyer who can make substantial investments in multiple steel mills and protect jobs. U.S. Steel argues that Nippon is the only buyer who can make substantial investments into multiple steel mills while protecting jobs. The powerful union said that the Japanese company engaged illegal trade practices and treated the union with bad faith. Previously, the union expressed its preference for a merger with Cleveland-Cliffs, which is unionized.
A new bid by Cleveland-Cliffs, if it materializes, risks antitrust scrutiny from federal antitrust regulators, though regulators in the Trump administration are widely expected to take a less aggressive approach to merger enforcement than their Biden administration predecessors.
