Cleveland-Cliffs CEO continues quest to acquire US Steel
In the meantime,Cleveland-Cliffs will be headed downstream to capitalize on its dominance of the grain-oriented electrical steel market.
Goncalves held a press conference on Monday January 13 at the company’s Butler Works in Butler, Pennsylvania, to stress the role that Cleveland-Cliffs should play on the national security front.
Safeguarding national security was ultimately the argument used by President Joe Biden to block the hotly contested $14.9-billion purchase of US Steel by Japan’s Nippon Steel. Cleveland-Cliffs had been a rival bidder, ultimately being outbid by a single dollar per share.
Gonçalves stressed to the audience on Monday that the question of whether he would have another chance at US Steel was a “when” question, as opposed to “if.”
“I want to buy. I have a plan. I have an all-American solution in place,” he said. “I know we can make American steel great again.”
To take that shot, however, US Steel must formally abandon its merger agreement with Nippon Steel. The company has been granted an extension to appeal Biden’s decision, through June 18.
Goncalves declined to comment on the dollar-value of any offer Cleveland-Cliffs might make, and he likewise declined to discuss potential partners or asset-carve out agreements. He said that if Cleveland-Cliffs were to buy US Steel, he would personally move to Pittsburgh, Pennsylvania; keep the company’s headquarters in Pittsburgh; and christen the steelmaking portion of Cleveland-Cliffs’ business “United States Steel,” while the iron ore portion would retain the Cleveland-Cliffs brand.
It had been reported by mainstream news outlets earlier in the day that one potential path for the acquisition could be an all-cash deal for US Steel, immediately followed by the sale of its electric-arc furnace (EAF) jewel Big River Steel to competitor Nucor.
Weirton reimagined
Throughout the press conference, Gonçalves referenced the company’s former tinplate works in Weirton, West Virginia, which was shuttered in February.
In July, Cleveland-Cliffs committed to spending at least $150 million to reopen Weirton as a captive transformer production facility, using the company’s grain-oriented electrical steel (GOES).
The company inherited the GOES-making capabilities of AK Steel when it acquired the latter five years ago. Former AK competitor Allegheny Technologies Inc no longer produces GOES.
Cleveland-Cliffs is currently in the process of buying equipment for the Weirton project. Start-up is slated for early 2026.
“You can’t have a country that’s not able to make the steel that goes in a transformer,” Gonçalves said.
Nippon Steel’s bid to buy US Steel unlikely to be “resuscitated”: Cleveland-Cliffs CEO
“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.
Nippon executive returns to US, continues acquisition negotiations
Nippon Steel is sending vice chairman Takahiro Miro back to the US as the Japanese steelmaker lobbies for support of its deal to acquire US Steel, Kallanish learns from a report by Reuters.
Miro’s itinerary is unavailable, but a source mentions that the Nippon executive will meet with various community officials and workers in states where US Steel operates.
The Nippon vice chairman has been acting as the company’s primary negotiator in the acquisition. His travels to the US in May and June failed to shore up any support from the United Steelworkers
(USW) union. Nor have political opponents of the deal publicly changed their positions. US President Joe Biden has said US Steel should remain American-owned (see Kallanish passim).
USW leadership has told union members that language in correspondence with Nippon is inconsistent and potentially harmful to workers and US national security (see Kallanish 1 July).
US Steel and its shareholders agreed to sell to Nippon Steel for roughly $15 billion after refusing a bid from domestic steelmaker Cleveland-Cliffs.
Kristen DiLandro USA
Cliffs/USS merger would have cleared antitrust: Lourenço Gonçalves
Cleveland-Cliffs’ top executive says his company’s bid for US Steel would have complied with US antitrust laws, Kallanish learns.
In an interview on Bloomberg Television, Cliffs chairman, president and ceo Lourenço Gonçalves says he had been in communication with the federal government to ensure that a Cliffs acquisition of its domestic competitor would have been lawful.
“I talked to the US government prior to making the offer to make sure I had a path to clear antitrust and US Steel decided not to listen and go with Nippon Steel,” Lourenço Gonçalves says.
US Steel rejected Cleveland-Cliffs $7.3 billion buyout proposal last summer (see Kallanish 14 August). The United Steelworkers union supported Cliffs’ purchase of US Steel and, by contract, has a de facto role in determining whether such a deal can go forward. The union assigned Cleveland-Cliffs a right to bid.
US Steel accepted Nippon Steel’s offer to purchase the company for $14.9 billion (see Kallanish 18 December).
A service centre operator who frequently stocks flat steel products produced by the two US steelmakers expressed his relief that US Steel had declined Cleveland-Cliffs’ proposal.
“We can’t have Cliffs responsible for that much of the market. It’s too much control for them,” says the steel flats purchaser.
The Cliffs CEO contends that Nippon Steel will not be able to follow through on its proposed transaction.
“The Titanic has already hit the iceberg,” Gonçalves says in the interview, adding: “We’ll be on the other side when the deal unravels.”
Kristen DiLandro USA
Esmark submits offer to acquire US Steel
Esmark, a privately held company with operations in the industrial and commodity sectors, announced Aug. 14 a voluntary public cash and exchange offer for all the outstanding shares in US Steel at a value of $35/share.
The offer from Esmark comes a day after US Steel said it would initiate a formal review process to “evaluate strategic alternatives for the company,” including the sale of the full company or some of its assets as it had received multiple unsolicited bids for all or portions of the company.
Following US Steel’s announcement, rival steelmaker, Cleveland-Cliffs said it submitted an offer in late July to acquire all of US Steel in a cash and stock deal, however, the offer was rejected by US Steel’s board on Aug. 13.
Esmark, based in the Pittsburgh area, said its initial offer period runs from Aug. 14 through Nov. 30 and may be extended. Completion of the offer is expected in the fourth quarter of 2023, subject to regulatory and antitrust clearances, it said.
Prior to founding the current Esmark, CEO James Bouchard previously worked for US Steel, formerly serving as vice president, commercial, for US Steel Europe. Bouchard led the company’s European commercial operations following the acquisition of its Kosice, Slovakia, mill.
Esmark Steel Group, a subsidiary of Esmark Inc, is a processor and distributor of value-added flat-rolled steel and is the third-largest US producer of tin plate steel. In addition to steel services, it has operations in oil and gas exploration, aviation, real estate, professional services and technology.
Author Justine Coyne
US Steel rejects Cleveland-Cliffs’ $7.3 billion bid
