Cleveland-Cliffs Eyes US Steel Acquisition Amid Nippon Deal Uncertainties

📝 SUMMARY: In a dramatic twist to the ongoing saga of United States Steel Corp.'s ($X) future, Cleveland-Cliffs Inc.'s ($CLF) CEO, Lourenco Goncalves, has publicly stated his intention to consider bidding for $X, should the current acquisition deal with Nippon Steel Corp. ($5401) fall through. Goncalves's announcement comes amid growing skepticism over the viability of the Nippon-$X merger, exacerbated by a significant share price drop for $X, reflecting investor apprehensions about the deal's completion.

Goncalves, known for his forthright and combative style, underscored his close relationship with the steelworkers' union by incorporating a live phone call with USW President David McCall during an interview. McCall confirmed the union's support for a Cleveland-Cliffs acquisition, a move that could significantly alter the competitive dynamics of the steel industry. This union backing is crucial, as the USW has previously expressed dissatisfaction with Nippon's takeover approach, preferring a bid that ensures $X remains under American ownership and control.

President Biden's recent statements advocating for $X to stay in American hands have added a new layer of complexity to the situation, highlighting the political and national security considerations at play. Biden's intervention reflects broader concerns about the loss of critical industries to foreign ownership, especially from a strategic ally like Japan. The president's remarks, coupled with the union's stance, signal a challenging path forward for Nippon's acquisition.

The potential Cleveland-Cliffs bid, though speculative at this stage, indicates Goncalves's strategic positioning to leverage union support and nationalistic sentiment to disrupt the current Nippon deal. His willingness to bid in the $30s, below Nippon's $55 per share offer, suggests a calculated move to capitalize on the current turmoil and uncertainty surrounding $X's future.

As the industry watches closely, the unfolding drama around $X's acquisition underscores the intricate balance between business strategy, labor relations, and political considerations in shaping the future of America's steel industry. With the Nippon deal hanging in the balance, Cleveland-Cliffs emerges as a potentially pivotal player in the saga, armed with union support and a keen eye on seizing a strategic opportunity amidst the turmoil.

🔍 SOURCE: https://www.bloomberg.com/news/articles/2024-03-14/cliffs-ceo-weighs-lowball-bid-for-us-steel-with-union-backing?srnd=homepage-americas