“At the moment, the deal has been legally blocked, and I don’t see how this deal can be resuscitated,” the CEO said in an interview with Fox Business on Tuesday January 7.
President Biden issued an order on Friday January 3 prohibiting Nippon Steel’s acquisition of US Steel following lengthy reviews by the Committee for Foreign Investment in the United States (CFIUS), saying it would “place one of America’s largest steel producers under foreign control and create risk for our national security and our critical supply chains.”
When asked if Cleveland-Cliffs is now prepared to make a new bid for US Steel, Gonçalves said, “No, I’m not.”
Gonçalves reiterated that his original bid for US Steel, if successful, would not have been anti-competitive.
“There are several other [competing US steelmakers]. Nucor is bigger than Cliffs. Steel Dynamics is almost the same size as Cliffs. A lot of [imported] steel comes into this country. [And] aluminum can compete against steel. [But all that] doesn’t mean I need to buy US Steel,” the CEO said.
In August 2023, Cleveland-Cliffs bid an initial $35 per share for US Steel, or about $7.3 billion. Goncalves said that the bid was raised over the auction period to about $54 per share, or slightly lower than Nippon Steel’s $55-per-share bid, but it was still rejected.
Cleveland-Cliffs’ final bid would be close to $14.7 billion, an industry analyst told Fastmarkets. Nippon Steel’s bid was around $14.9 billion.
This might be the first public disclosure that Cleveland-Cliffs was the unknown bidder who offered $54 per share to buy US Steel in 2023, the analyst said.
US Steel and Nippon Steel did not immediately respond to a request for comment.
Nippon Steel and US Steel also separately sued Goncalves and United Steelworkers president David McCall, alleging racketeering and monopolistic conspiracies in trying to block the deal.
“I’ve never had so much time to prepare for a lawsuit, as I knew that was coming,” Goncalves said.
The CEO said three 90-day reviews by CFIUS had failed to produce a consensus on whether it posed a national security threat, leaving the matter up to President Biden to decide.
Goncalves also said that the prospects for US Steel and all other steelmakers are set to improve markedly during the Trump administration in ways that will make it even more difficult for Nippon Steel or any other potential foreign company to acquire US steelmakers.
“The situation has changed. The backdrop of the market changed. We have a new President coming to town, and tariffs are coming,” Goncalves said in the interview.
The CEO added that Senator Marco Rubio, nominated to be Secretary of State in the Trump administration, is a fierce critic of Nippon Steel’s bid for US Steel and foreign ownership of critical US industries.
Gonçalves also faulted Japan and China for creating “overcapacity” in steel production by producing more than they can consume and, thus, being motivated to export the excess production.
Separately, Cleveland-Cliffs’ $2.5 billion bid last July to acquire Canadian steelmaker Stelco was approved by shareholders and cleared antitrust review in October.
