By Anirban Sen, Alexandra Alper and David Shepardson
(Reuters) – Cleveland-Cliffs is partnering with peer Nucor to prepare a potential all-cash bid for U.S. Steel, with an offer in the high $30s per share, a person familiar with the matter said on Monday.
Cliffs is aiming to purchase all of U.S. Steel and then sell its Big River Steel mill 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 rival Japan’s Nippon Steel, which has an agreed deal to buy U.S. Steel, engaged in a war of words over who was the better partner for the struggling company.
Goncalves reiterated in a wide-ranging press conference on Monday in Butler, Pennsylvania, that he wanted to bid again for U.S. Steel after making a rejected offer in 2023 and had a plan, but declined to elaborate on details.
“I’m happy that I’m in a position to make an offer that will execute on the wishes of the board and the management,” Goncalves said. “They sell, they go away. We take over. We do good. America will be better, America will be stronger,” he added.
U.S. Steel shares closed at $36.34 on Monday. Nucor did not respond immediately to a request for comment.
Cliffs’ potential bid, first reported by CNBC, appeared aimed at ratcheting up pressure on Nippon Steel, whose imperiled $14.9 billion bid for U.S. Steel was blocked by President Joe Biden in a Jan. 7 executive order that cited unspecified national security concerns.
Nippon Steel, which had offered $55 a share cash for U.S. Steel, said in a statement that it would do whatever it takes to close its deal and that it was the only partner that could keep U.S. Steel intact and protect jobs.
U.S. Steel said in a statement it remained “committed to completing” its merger with Nippon Steel.
“Only Nippon Steel’s partnership will deliver $55 per share to our shareholders and guarantee the significant capital investments and technology sharing needed to ensure a strong U.S. Steel for generations to come and protect jobs,” it added.
Enforcement of Biden’s order, which gave the parties 30 days to unwind the transaction, was postponed until June after the companies sued the U.S. president, alleging he violated the constitution by depriving them of due process when he blocked the deal.
Nippon Steel and U.S. Steel also sued Goncalves and Cliffs, alleging “illegal and coordinated actions” aimed at scuttling the deal in order to “monopolize the domestic steel markets.”
Cliffs described the lawsuit as “baseless.”
EARLIER CLIFFS OFFER
Steelmaker and iron ore miner Cliffs, which has been led by Brazilian-born Goncalves for more than a decade, made an unsolicited bid for U.S. Steel in August 2023 at $54 per share, with half offered in company stock. It won the support of the United Steelworkers union, arguing the companies combined would “create a lower-cost, more innovative, and stronger domestic supplier.”
But U.S. Steel raised concerns that a tie-up with Cliffs risked being shot down by antitrust regulators because it would consolidate the supply of steel to U.S. automakers and put up to 95% of U.S. iron ore production under the control of one company. U.S. Steel’s board rejected the offer.
Nippon Steel’s December 2023 all-cash offer was higher than Cliffs’ and the Japanese company later promised to revitalize U.S. Steel’s aging 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 wooed voters in the swing state of Pennsylvania where U.S. Steel is headquartered.
Trump and Biden both asserted the company should remain American-owned after USW President David McCall expressed his opposition to the tie-up.
Citing media reports that “other companies” were considering a bid for U.S. Steel, USW said in a statement on Monday that it would “subject the potential transaction to the same scrutiny as any other bid, with our measuring stick, as always, being its impact on our facilities and jobs, as well as the long-term security of our industry.”
GONCALVES TAKES AIM AT JAPAN
Goncalves also took aim at Japan in his press conference Monday, describing it as “worse than China,” as he sought to disparage Nippon Steel’s homeland.
“China is bad, China is evil, China is horrible, but Japan is worse, Japan is a lot worse,” he said, saying Japan taught China how to “dump, how to have over-capacity, how to overproduce” steel in the U.S. market, driving down prices.
Nippon Steel countered in its statement that Goncalves was engaging in “biased stereotypes.”
“What his words cannot mask is that he cannot match the scope and scale of our plan,” the Japanese company said.
U.S. Steel said it was “incredibly disappointed in the verbal attacks levied by Mr. Goncalves”, including those against Nippon Steel and the people of Japan, “a critical U.S. ally.”
The Japanese embassy and the Chinese embassy in Washington did not immediately respond to requests for comment.
(Reporting by Anirban Sen in New York, Alexandra Alper and David Shepardson in Washington, Shivansh Tiwary, Nathan Gomes and Aishwarya Jain in Bengaluru and Rocky Swift in Tokyo. Editing by Jamie Freed)
