Cleveland Cliffs again offers to buy U.S. Steel

Illinois Correspondent

An American steel company is willing to bid for U.S. Steel if the controversial deal with Nippon Steel falls apart amid loud opposition from unions and lawmakers, including President Joe Biden, who has voiced his opposition to the sale.

Cleveland-Cliffs CEO Lourenco Goncalves told Reuters they would bid $30 per share if the deal with Nippon collapses, according to the Duluth News-Tribune. That total would be at least 45 percent lower than Nippon’s offer, which was considered significantly above U.S. Steel’s estimated value at the time of the offer. It would put U.S. Steel’s purchase at $6.7 billion instead of Nippon’s $15 billion.

Goncalves said Japan is “worse than China” when it comes to the steel trade. “Japan continues to be a serial dumper of steel in the United States,” Goncalves said. “I’m going to work to ensure the continuation of the same tariffs on Japanese steel trade because if we remove the tariffs, they will just hurt us.”

Nippon Steel has faced loud opposition to its acquisition of U.S. Steel from lawmakers and unions alike. Cleveland Cliffs, on the other hand, would eliminate the concerns about foreign ownership of the iconic steel company and would have the backing of United Steelworkers.

Last summer, Cleveland-Cliffs made an unsolicited bid for U.S. Steel, which the board rejected. But during a strategic review, U.S. Steel chose Nippon instead without consulting USW.

Gonclaves is “known in the industry for his colorful and combative approach,” according to Bloomberg, and called USW President David McCall during the interview to back up his claims. McCall also reiterated the union’s support for a potential Cliffs purchase, according to Bloomberg.

Goncalves believes it is “a foregone conclusion’ that the Nippon deal will fall apart.

“There is no more lobbying, there’s no more negotiation. It’s over,” he said. “And the only other buyer that the union would accept is Cleveland-Cliffs.”

Recently President Joe Biden declared his grave concerns about the purchase, which Bloomberg said shines “a fresh light on the influential position held by the USW and its leader.”

USW leader David McCall has said that an in-writing, legally binding agreement that Nippon will honor all of its Labor contracts is required to get the deal done, which Bloomberg reports has not happened despite verbal assurances that Nippon would honor the contracts.

Meanwhile, Nippon responded to Biden’s concerns with its own statement: it committed to investing another $1.4 billion in U.S. Steel facilities and that there will be no layoffs or plant closures as a result of the purchase.

“Our transaction delivers clear benefits to U.S. Steel, union workers, the broader American steel industry and American national security,” the statement read.

Nippon pointed out that it has operated steel mills in the U.S. for decades, with 4,000 American employees including 620 represented by USW, and imported metallurgical coal for more than 70 years. It vowed to drive quality and competitiveness while strengthening American supply chains and economic defenses against China.

“No other U.S. steel company on its own can meet this challenge while also meeting antitrust requirements,” the statement read. “Our aim is to bolster and grow U.S. Steel in the U.S. market in a way that prioritizes its talented employees, and we have provided significant commitments to the USW in our continued efforts to reach a mutually agreeable resolution.”

Those commitments include job and pension security, capital investment, technology sharing, financial reporting and others, according to the statement.

“Nippon Steel is the right partner to ensure that U. S. Steel is successful for generations to come as an iconic American company,” the statement read. “We are progressing through the regulatory review, including CFIUS, while trusting the rule-of-law, objectivity, and due process we expect from the U.S. government. We are determined to see this through and complete the transaction.”

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