Cleveland-Cliffs CEO Expresses Interest in US Steel Amidst Reports of Blocked Nippon-US Steel Deal

CEO Lourenco Goncalves Confirms Interest in US Steel

Lourenco Goncalves, CEO of Cleveland-Cliffs, confirmed his company's interest in purchasing US Steel during a recent appearance on CNBC. This comes amid reports that President Biden is preparing to block the $14.9 billion deal between US Steel and Japan's Nippon Steel. Goncalves stated that the Nippon-US Steel deal had already collapsed, leaving his Ohio-based steel company as the only viable buyer.

Goncalves' Prediction of Nippon Steel's Bid Collapse

When asked by CNBC's Morgan Brennan if Cleveland-Cliffs would consider purchasing US Steel if the Nippon-US Steel deal fell through, Goncalves responded affirmatively. He further stated that the collapse of the Nippon Steel deal was the most predictable outcome he could have foreseen in the steel industry. Goncalves criticized Nippon Steel for its unfair trade practices and its negative impact on the US steel industry and union jobs. He expressed relief that the end of the deal was in sight. In a December interview, Goncalves had predicted that Nippon Steel's bid would fail, leaving Cleveland-Cliffs as the only viable bidder for US Steel.

Goncalves Works to Revive Deal with US Steel

Goncalves has stated that he is working with JPMorgan Chase and Wells Fargo to revive a deal to acquire US Steel. It's important to note that Nippon Steel outbid Cleveland-Cliffs with a $55 per share offer, compared to Cleveland-Cliffs' $35 per share for US Steel.

Goncalves Applauds Biden Administration's Move

Goncalves praised reports suggesting that the Biden administration is preparing to officially block the foreign takeover of US Steel. He commended President Biden and the US government for their decision, emphasizing the crucial role of the American steel industry in national security. He expressed his belief that the industry is best served by American companies committed to the long-term prosperity of domestic manufacturing, supported by good paying union jobs, under American ownership.

US Steel Shares Rise Amidst Reports of Blocked Deal

Following these developments, shares of US Steel have risen by 3% after a 25% plunge on Wednesday due to reports that Biden is preparing to block the deal. However, Wolfe Research analyst Timna Tanners was quoted by Bloomberg as saying that steel prices are currently weak and that it might not be easy for Cleveland-Cliffs to make such a transaction anytime soon.

Bottom Line

The potential blocking of the Nippon-US Steel deal by the Biden administration has stirred up the steel industry. Cleveland-Cliffs' CEO has expressed his company's readiness to step in as a buyer for US Steel, while also commending the administration's move. However, the current state of steel prices might pose a challenge to such a transaction. What are your thoughts on this development? Feel free to share this article with your friends and engage in the discussion. Remember, you can sign up for the Daily Briefing, which is delivered every day at 6pm.