A possible new takeover offer for U.S. Steel surfaced on Monday, adding to confusion over the once-dominant company's future following President Biden's decision to block the Japanese company's takeover. .
Lourenco Goncalves, CEO of U.S. rival Cleveland-Cliffs, said his company had a “national solution to save U.S. Steel Corp.” “It's a matter of when, not if,” he emphasized, but he declined to provide details of the bidding plan.
Cleveland-Cliffs' new expression of interest comes less than two weeks after Biden blocked Nippon Steel's $14 billion takeover of U.S. Steel, arguing that the sale would pose a threat to national security. It was done. The Cleveland-Cliffs tried to buy U.S. Steel in 2023, but the offer was rejected in favor of Nippon Steel's higher bid.
CNBC reported Monday morning that Cleveland-Cliffs is acquiring U.S. Steel and selling its subsidiary, Big River Steel, to another American producer, Nucor. But in a press conference later that day, Gonsalves denied any partnership with Nucor on the bid.
U.S. Steel and Nucor did not respond to requests for comment.
Investors seemed pleased with the deal, with U.S. Steel stock rising as much as 10% on Monday when CNBC reported on the potential offer. U.S. Steel stock has fallen 22% over the past year, including Monday's jump.
However, the fate of Nippon's takeover proposal remains undecided. U.S. Steel and Nippon Steel last week sued the U.S. government in an effort to revive the merger, alleging that Biden and other government officials corrupted the vetting process and blocked the merger under false pretenses for political gain.
The companies filed separate lawsuits against Cleveland-Cliffs, Gonsalves, and David McCall, international president of the United Steelworkers union. They allege that the Cleveland-Cliffs and union leaders illegally colluded to undermine the agreement with Japan, an allegation that both defendants call “baseless.”
The companies announced Saturday that the Biden administration has delayed enforcement of an executive order blocking the Nippon deal until June to give courts time to consider the lawsuit.
“The problem is, nothing can happen until U.S. Steel's current management and current board of directors decide to abandon the merger agreement with Nippon Steel,” Gonsalves said at a news conference in Butler, Pennsylvania. . on monday.
Given this grudge, it's unclear how receptive U.S. Steel will be to a new bid by the Cleveland Cliffs. If U.S. Steel is not involved, one option would be for Cleveland-Cliffs to make an offer to shareholders.
U.S. Steel was once the world's largest steel producer, but has fallen down in global rankings in recent years. Concerns about the company's long-term future are rooted in its failure to quickly introduce more energy-efficient and cost-effective alternatives to its traditional factories. U.S. Steel has invested heavily in multiple steel mills and argues that Japan is the only buyer that can protect jobs.
The United Steelworkers union, which represents 11,000 U.S. Steel employees, has expressed strong opposition to the proposed merger with Nippon Steel. Powerful labor unions alleged that the Japanese company had engaged in illegal trade practices and had been dishonest in its dealings with unions. The union had previously expressed a desire to merge with union organizer Cleveland Cliffs.
A new bid by Cleveland-Cliffs risks antitrust scrutiny from federal antitrust regulators, but Trump administration regulators have been less aggressive than their Biden predecessors in enforcing mergers. It is widely expected that the government will take a different approach.
