By Anirban Sen, Alexandra Alper and David Shepardson
(Reuters) – Cleveland-Cliffs (NYSE:) is teaming up with its peer Nucor (NYSE:) to prepare a possible cash bid for US Steel, with an offer of around $30 a share, a person familiar with the matter said Monday.
Cliffs intends to buy all of US Steel and then sell its Big River Steel factory to Nucor if the deal is completed, the person added on condition of anonymity because the details have not been made public.
Cliffs CEO Lourenco Goncalves and Japanese rival Nippon Steel, which has an agreed deal to buy US Steel, engaged in a war of words over who was the best partner for the struggling company.
Goncalves reiterated at a wide-ranging news conference Monday in Butler, Pennsylvania, that he wanted to rebid for US Steel after making a rejected offer in 2023 and that he had a plan, but he declined to elaborate.
“I am happy to be in a position to make an offer that fits the wishes of the board of directors and management,” Gonçalves said. “They sell, they leave. We take control. We do good. America will be better, America will be stronger,” he added.
US Steel shares closed Monday at $36.34. Nucor did not immediately respond to a request for comment.
Cliffs’ potential bid, first reported by CNBC, appeared 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. which cited unspecified national security concerns.
Nippon Steel, which had offered $55 a share in cash for US Steel, said in a statement that it would do whatever it took to close the deal and that it was the only partner that could keep US Steel intact and protect jobs.
US Steel said in a statement that it remained “committed to completing” its merger with Nippon Steel.
“The Nippon Steel partnership alone will deliver $55 per share to our shareholders and ensure the significant capital investments and technology sharing needed to ensure a strong US Steel for generations to come and protect jobs,” he added.
Implementation of Biden’s order, which gave the parties 30 days to unwind the transaction, was postponed until June after the companies sued the US president, alleging that he violated the constitution by depriving them of due process when he blocked the deal.
Nippon Steel and US Steel also sued Goncalves and Cliffs, alleging “unlawful and coordinated actions” aimed at scuttling the deal to “monopolize domestic steel markets.”
Cliffs described the lawsuit as “baseless.”
PREVIOUS CLIFFS OFFER
Steel and iron ore miner Cliffs, which has been run by Brazilian Gonçalves for more than a decade, made an unsolicited bid for US Steel in August 2023 at $54 per share, with half offered in shares of the company. He won support from the United Steelworkers union, arguing that the combined companies would “create a lower-cost, more innovative and stronger national supplier.”
But US Steel expressed concern that a tie-up with Cliffs risked rejection by antitrust regulators because it would consolidate steel supplies to US automakers and put up to 95% of US iron ore production under the control of a single company. US Steel’s board of directors rejected the offer.
Nippon Steel’s December 2023 all-cash offer was higher than Cliffs’ and the Japanese company later promised to revitalize former US Steel mills with investment from an allied nation.
But the offer became politicized, with both Biden and Republican President-elect Donald Trump pledging to kill the deal as they courted voters in the swing state of Pennsylvania, where US Steel is headquartered.
Both Trump and Biden said the company should remain US-owned after USW President David McCall expressed opposition to the alliance.
Citing media reports that “other companies” were considering a bid for US Steel, USW said in a statement Monday that it would “subject the potential transaction to the same scrutiny as any other bid, with our measuring stick being, as always, its impact on our facilities and jobs, as well as the long-term safety of our industry.”
GONCALVES Aims for Japan
Goncalves also took aim at Japan in his Monday press conference, describing it as “worse than China” while seeking to disparage Nippon Steel’s homeland.
“China is bad, China is evil, China is horrible, but Japan is worse, Japan is much worse,” he said, claiming that Japan taught China how to “dump, how to have excess capacity, how to overproduce” steel. in the US market, which lowered prices.
Nippon Steel responded in its statement that Gonçalves was engaging in “biased stereotyping.”
“What your words cannot hide is that you cannot match the scope and scale of our plan,” the Japanese company said.
US Steel said it was “incredibly disappointed by the verbal attacks launched by Mr. Goncalves,” including those against Nippon Steel and the people of Japan, “a critical ally of the United States.”
The Japanese embassy and the Chinese embassy in Washington did not immediately respond to requests for comment.