REGIONAL— The war of words between U.S. Steel and Cleveland-Cliffs escalated recently over the future of the proposed sale of U.S. Steel to Japan-based Nippon Steel Corporation.
Nippon’s tender offer of just over $14 billion, announced earlier this year, has run into a series of hurdles, including opposition from the United Steelworkers as well as President Biden.
U.S. Steel, last August, rejected a $7.3 billion offer from Cleveland-Cliffs, which had the backing of the steelworkers union.
Cleveland-Cliffs CEO Lourenco Goncalves has been critical of the potential sale of U.S. Steel to a rival, one that could inject new investment into a company that currently competes with Goncalves’ company. Goncalves has questioned the ability of U.S. Steel to close its deal with Nippon, in part due to union opposition.
Goncalves’ comments prompted the U.S. Steel board of directors to issue a May 21 statement that lauds the potential value of the sale to workers and the competitiveness of the U.S. steel industry, and responds to what it called “a misinformation campaign,” being waged by Cliffs.
“The investment by NSC has been under attack since day one by one of our competitors and unsuccessful bidder – Cleveland-Cliffs – who have been sowing misinformation to our stakeholders in a relentless and unbridled effort to derail the transaction,” wrote the board in the statement. “While Cleveland-Cliffs is pushing false rumors to influence the market into believing we are working to unwind the transaction, nothing could be further from the truth.”
A sale of U.S. Steel to Cleveland-Cliffs would leave the Ohio-based company effectively in control of 100 percent of the nation’s iron ore production, about 80 percent of automotive steel, and about 50 percent of the domestic flat steel market, a potential concentration that would potentially raise anti-trust concerns.
U.S. Steel argues that an acquisition by an outside company, like Nippon, would maintain the current competitiveness of the domestic steel industry.
U.S. Steel’s board letter prompted immediate return fire from Goncalves, who dismissed the suggestion that he had engaged in misinformation. “At Cleveland-Cliffs, we only deal with transparency,” said Goncalves. “It is unfortunate that the U.S. Steel Board of Directors is just now realizing that it announced an un-closeable deal and is trying to blame Cliffs for its terrible decision-making.”
Goncalves accused U.S. Steel of peddling its own misinformation, by insisting that the steelworkers union lacks veto authority over the deal. “With a USW-represented facility, you are not entitled to sell to whomever you please,” said Goncalves. “We knew this, and you apparently did not. We tried to explain to you, but you did not listen to us. The Board of Directors of U.S. Steel failed its stockholders in this ‘strategic review process,’ and is attempting to blame Cliffs for its own self-inflicted disaster. My opinion remains the same: You cannot and will not close your announced deal with Nippon Steel.”
U.S. Steel disagrees. “We look forward to closing in the second half of this year,” wrote the board.