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A possible new takeover bid for US Steel emerged on Monday, fueling more turmoil over the once-dominant company’s future following President Biden’s decision to block its acquisition by the Japanese firm.
Lourenco Goncalves, CEO of US rival Cleveland-Cliffs, said his company has “an all-American solution to save United States Steel Corporation”, stressing that a takeover of US Steel is a matter of “when” not “if”. But he offered no details on the bidding plans.
The renewed interest from Cleveland-Cliffs comes less than two weeks after Mr. Biden blocked Nippon Steel’s $14 billion takeover of US Steel, arguing the sale posed a national security threat. Cleveland-Cliffs tried to buy US Steel in 2023, the offer was rejected in favor of Nippon’s higher offer.
CNBC reported Monday morning that Cleveland-Cliffs will seek to acquire US Steel and sell its subsidiary, Big River Steel, to Nucor, another US producer. But Mr. Goncalves, at a news conference later in the day, would not confirm any partnership with Nucor in the bid.
US Steel and Nucor did not immediately respond to requests for comment.
Investors seemed pleased with the potential offer, and US Steel shares rose as much as 10 percent on Monday when CNBC reported on the potential offer. US Steel shares ended about 6 percent higher on Monday, but were down 23 percent over the past year, including Monday’s jump.
But the fate of Nippon’s proposed takeover remains uncertain. US Steel and Nippon sued the United States government last week in hopes of reviving their merger, accusing Mr. Biden and other senior administration officials for corrupting the review process for political gain and blocking the deal under false pretenses.
The companies filed a separate lawsuit against Cleveland-Cliffs, Mr. Goncalves and David McCall, international president of the United Steelworkers union. They claim Cleveland-Cliffs and the union boss colluded illegally to undermine the Nippon contract, claims both defendants called “baseless.”
On Saturday, the companies said the Biden administration had delayed implementation of its executive order blocking Nippon’s takeover until June to give the courts time to review the lawsuit.
“The problem is that we can’t do anything until the current management and the current board of directors of US Steel make a decision to abandon the merger agreement with Nippon Steel,” said Mr. Goncalves at a press conference in Butler, Pennsylvania. on Monday.
Given this resentment, it’s unclear how receptive US Steel would be to a new offer from Cleveland-Cliffs. If US Steel doesn’t get involved, one option would be for Cleveland-Cliffs to accept a shareholder offer.
US Steel was once the world’s largest steel producer, but the company has fallen in recent years in the global rankings. Concerns about its long-term future are rooted in the failure to rapidly adopt more energy-efficient and cost-effective alternatives to traditional mills. Nippon, US Steel argued, is the only buyer that can make significant investments in multiple steel plants and protect jobs.
The United Steelworkers, which represents 11,000 US Steel employees, has expressed strong opposition to the proposed merger with Nippon. The powerful union said the Japanese company engaged in illegal trade and acted in bad faith with the union. The union had previously expressed its preference for a merger with Cleveland-Cliffs, which is unionized.
Cleveland-Cliffs’ new offer, if it goes through, risks antitrust scrutiny from federal antitrust regulators, although regulators in the Trump administration are expected to take a less aggressive approach to merger enforcement than their predecessors in the Biden administration.
