Anirban Sen, Alexandra Alper and David Shepardson
(Reuters) – Cleveland-Cliffs (NYSE: ) is a peer partner Nucor (NYSE: ) to prepare a potential all-cash offer for US Steel, with an offer in the high $30s per share, a person familiar with the matter said on Monday.
Cliffs intends to buy all of US Steel and then sell its Big River Steel plant to Nucor if the deal closes, the person added, speaking on condition of anonymity because details were not disclosed.
Cliffs CEO Lourenco Goncalves and Japanese rival Nippon Steel, which has agreed to buy US Steel, have engaged in a war of words over who is the better partner for the struggling company.
At a wide-ranging press conference Monday in Butler, Pennsylvania, Goncalves reiterated that he wants to rebid US Steel after making a rejected bid in 2023 and that he has a plan, but declined to elaborate.
“I am happy to be in a position to make an offer that will meet the wishes of the board and management,” Goncalves said. “They sell, they leave. We take over. We do good. America will be better, America will be stronger,” he added.
Shares of US Steel closed at $36.34 on Monday. Nucor did not immediately respond to a request for comment.
Cliffs’ potential offer, first reported by CNBC, appears to be aimed at increasing pressure on Nippon Steel, whose threatened $14.9 billion bid for US Steel was blocked by President Joe Biden in a Jan. 7 executive order that stated unspecified national security concerns.
Nippon Steel, which offered $55 a share in cash for US Steel, said in a statement that it will do whatever it takes to close the deal and that it is the only partner that can keep US Steel intact and protect jobs.
US Steel said in a statement that it remains “committed to completing” its merger with Nippon Steel.
“The Nippon Steel partnership alone will deliver $55 per share to our shareholders and guarantee the significant capital investment and technology sharing needed to ensure a strong US Steel for generations to come and protect jobs,” it added.
Implementation of Biden’s order, which gave the parties 30 days to unwind the transaction, was delayed until June after the companies sued the US president, alleging he violated the constitution by denying them due process when he blocked the deal.
Nippon Steel and US Steel also sued Goncalves and Cliffs, alleging “illegal and coordinated actions” aimed at undermining the deal to “monopolize the domestic steel market.”
Cliffs described the lawsuit as “baseless.”
CLIFF’S EARLIER OFFER
Steelmaker and iron ore miner Cliffs, led for more than a decade by Brazilian-born Goncalves, made an unsolicited offer for US Steel in August 2023 at $54 a share, with half offered in company stock. It won the support of the United Steelworkers union, claiming that together the companies would “create a cheaper, more innovative and stronger domestic supplier”.
But US Steel has expressed concern that the Cliffs tie-up risks being shot down by antitrust regulators because it would consolidate steel supplies to US carmakers and put up to 95% of US iron ore production under one company’s control. US Steel’s board of directors rejected the offer.
Nippon Steel’s cash offer in December 2023 was higher than Cliffs’, and the Japanese company later promised to revitalize US Steel’s aging plants with an investment from the allied state.
But the offer became politicized, with both Biden and Republican President-elect Donald Trump vowing to scrap the deal as they wooed voters in the swing state of Pennsylvania, where US Steel is headquartered.
Both Trump and Biden argued that the company should remain American-owned after USW President David McCall voiced his opposition to the merger.
Citing media reports that “other companies” were considering a bid for US Steel, USW said in a statement on Monday that it would “subject a potential transaction to the same scrutiny as any other bid, with our measuring stick as always being the impact on our facilities and workplaces, as well as the long-term security of our industry.”
GONCALVES GOES TO JAPAN
Goncalves also took aim at Japan at his press conference on Monday, describing it as “worse than China” as he sought to disparage Nippon Steel’s home country.
“China is bad, China is evil, China is terrible, but Japan is worse, Japan is much worse,” he said, saying Japan had taught China how to “dump, how to have overcapacity, how to overproduce” steel in the US market, lowering prices.
Nippon Steel countered in its statement that Goncalves engaged in “biased stereotyping.”
“What his words cannot conceal is that he cannot match the scope and scale of our plan,” the Japanese company said.
US Steel said it was “incredibly disappointed by Mr. Goncalves’ verbal attacks,” including those against Nippon Steel and the people of Japan, a “key American ally.”
The Japanese embassy and the Chinese embassy in Washington did not immediately respond to requests for comment.
