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Cleveland-Cliffs CEO mulls much lower bid for US Steel if Nippon deal falls apart
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Cleveland-Cliffs CEO mulls much lower bid for US Steel if Nippon deal falls apart
Mar 15, 2024 6:44 AM

NEW YORK, March 14 (Reuters) - Cleveland-Cliffs ( CLF )

CEO Lourenco Goncalves said on Thursday he would consider

another bid for United States Steel ( X ) likely worth no more

than $30 per share if the latter's $14.1 billion deal with

Japan's Nippon Steel ( NISTF ) falls apart.

In an interview with Reuters, Goncalves said

Cleveland-Cliffs ( CLF ), which last year was among the bidders for U.S.

Steel, continued to have the backing of steel union United

Steelworkers (USW) and that U.S. Steel's deal with Nippon Steel ( NISTF )

should be blocked because "Japan is not a friend" of the United

States.

"Japan in the steel trade is worse than China," said

Goncalves. "Japan continues to be a serial dumper of steel in

the United States. I'm going to work to ensure the continuation

of the same tariffs on Japanese steel trade because if we remove

the tariffs, they will just hurt us."

Goncalves' remarks came after U.S. President Joe Biden on

Thursday raised concerns over Nippon Steel's ( NISTF ) takeover of the

iconic 122-year-old U.S. steelmaker.

Biden said it was important for the U.S. to maintain "strong

American steel companies powered by American steel workers" and

that it was vital for U.S. Steel "to remain an American steel

company that is domestically owned and operated."

Since Biden's remarks, U.S. Steel's shares have fallen

more than 15%. The stock closed down more than 6% at $38.26 on

Thursday, far below the $55 per share price it agreed with

Nippon Steel ( NISTF ).

The issue has the potential to overshadow an April 10

summit between Biden and Japanese Prime Minister Fumio Kishida

aimed at boosting the long-standing security alliance between

their countries in the face of growing Chinese strength.

Nippon Steel ( NISTF ) has, so far, said it is confident of

successfully completing the acquisition of U.S. Steel, despite

the opposition it has faced from the USW and certain U.S.

senators. In January, Nippon Steel ( NISTF ) President Eiji Hashimoto told

reporters that "the deal poses no harm to America."

If the all-cash deal with Nippon Steel ( NISTF ) were to fall

apart, Cleveland-Cliffs ( CLF ) may choose to bid for U.S. Steel again

but may not offer more than $30 per share, Goncalves said. That

would be at least a 45% discount to Nippon Steel's ( NISTF ) offer and

substantially lower than Cleveland-Cliffs' ( CLF ) earlier

cash-and-stock bid that it valued at $54 a share in December.

"I would say that 30 bucks is a very good offer. Three

zero. Not 35, not 34, not 33, not 31 but 30 rounded in an

all-cash bid - that would be good enough for U.S. Steel," said

Goncalves. At $30 per share, U.S. Steel would be valued at $6.7

billion.

Since the Nippon Steel ( NISTF ) transaction was announced in

December, several Democratic and Republican U.S. senators have

criticized the deal, citing national security concerns or

raising questions about why the two companies did not consult

U.S. Steel's main union ahead of the announcement.

Donald Trump, Biden's rival in the November U.S

presidential election, has said he would block the acquisition

of U.S. Steel if elected.

"They sold to the wrong bidder. They knew my opinion and

the opinion of the USW, and of course they can ignore my

opinion, but you cannot ignore the opinion of the USW. It was a

fatal mistake," said Goncalves.

U.S. Steel and Nippon Steel ( NISTF ) did not immediately respond to

Reuters' requests for comments.

(Additional reporting by Pratyush Thakur in Bengaluru; Editing

by Krishna Chandra Eluri, Shounak Dasgupta and Jamie Freed)

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