Cleveland-Cliffs Inc. chief executive officer Lourenco Goncalves said he’d consider another bid — with union support — for United States Steel Corp., albeit at a significantly lower price than the existing offer from Nippon Steel Corp.
That potential bid, though, is dependent on the current Nippon-US Steel tie-up falling apart, Goncalves said in a phone interview. If he were to make an offer, the Cliffs CEO said he’d have the backing of the influential steelworkers union that’s also blasted Nippon’s takeover approach.
The Cliffs CEO, known in the industry for his colorful and combative approach, touted his closeness and support from the influential steel union — and then proved his point by dialing USW President David McCall into the call with Bloomberg News. In the call, McCall reiterated the union’s support for a potential Cliffs bid.
Goncalves also said he’s talking regularly to the White House.
The White House declined to comment.
A recent share plunge for US Steel shows that investors are increasingly concerned about the future of the Nippon deal. President Joe Biden on Thursday said the iconic Pennsylvania company should retain American ownership. Biden’s move against a takeover by a the Japanese company came despite the risk of upsetting a key ally.
US Steel plunged as much as 11% on Thursday to $36.38. The stock is down about 20% in two days, on pace for the biggest such loss since 2020.
Nippon’s proposal is to buy the company for $55 per share in cash.
If given the opportunity, Goncalves would consider a bid “in the $30s,” he said in the interview Thursday.
Nippon didn’t immediately respond to a request for comment. On Wednesday, Nippon Steel and US Steel in a joint statement said the companies will continue to advocate for the deal, and “we are confident that fair and thoughtful evaluation will result in its approval.”
Biden’s Intervention
Biden’s statement marks a rare presidential intervention in a transaction that outside an election year would have drawn less public scrutiny. Despite its storied history, US Steel’s role in the economy has diminished over several decades, a period during which producers in Asia have risen to dominate the global steel market. And while Nippon Steel’s proposed $14.1 billion acquisition targets a historic business name, a takeover in the US commodities industry by a company based in a friendly country is hardly unusual.
Still, the announcement of a Japanese company’s acquisition triggered opposition from Republican and Democratic lawmakers as well as the influential United Steelworkers union. Biden’s allies have urged the administration to kill the deal over national security concerns and the threat to unionized steel jobs.
Goncalves said he thinks it’s a “foregone conclusion” the Nippon deal will fall apart.
“There is no more lobbying, there’s no more negotiation. It’s over. It’s over,” Goncalves said, referring to Nippon Steel’s deal to buy US Steel. “And the only other buyer that the union would accept is Cleveland-Cliffs.”
Union support
After dialing McCall into the phone interview, Goncalves said to the union leader: “I would like you to, if you can, express to him — to confirm or negate — if you disagree with me, that Cliffs is the only company the union would endorse to acquire.”
“Yes, because you still have our right to bid,” McCall responded to Goncalves. He was referring to a legal right the union had to launch a counteroffer for US Steel, which it transferred to Cliffs last year.
The Nippon bid remains on the table and it’s not clear what implications Biden’s remarks might actually have for an ongoing federal review.
Still, the reiteration of support from the union for Cliffs will be a blow to the Japanese company, which has been seeking to win over McCall and his labor group in order to reduce the political pressure against the deal.