In early January, former President Joe Biden blocked a $14.9 billion bid by Japan's Nippon Steel to purchase U.S. Steel, citing national security concerns. The decision has sent ripples through the steel industry, leading to significant developments and reshuffled plans. In contrast, former President Donald Trump announced that Nippon Steel would instead make substantial investments in U.S. Steel rather than proceed with an acquisition. This announcement caused U.S. Steel shares to plummet more than 6%, leaving the future of U.S. Steel in question.
U.S. Steel and Nippon have since taken legal action, asking a federal court to overturn Biden's decision, claiming it was unconstitutional. Amidst these legal challenges, Nippon-rival Cleveland-Cliffs has emerged with its own proposal to acquire U.S. Steel in an all-cash deal, planning to sell the Big River Steel subsidiary to Nucor. CEO Lourenco Goncalves of Cleveland-Cliffs emphasized his vision for a domestic solution that prioritizes American workers.
"I have a plan, I have an all-American solution in place," – Lourenco Goncalves, CEO of Cleveland-Cliffs
Nippon had originally intended to buy U.S. Steel at $55 per share, but following Biden's intervention, Cleveland-Cliffs has proposed an offer reportedly in the high $30s per share range. The strategy of Cleveland-Cliffs revolves around maintaining U.S. Steel's headquarters in Pittsburgh, showcasing their commitment to preserving American jobs and industry integrity.
President Trump added a layer of confusion during his remarks by mistakenly referring to Nissan instead of Nippon regarding the investment plans. Despite this slip, U.S. Steel CEO David Burritt met with Trump at the White House on Thursday, underscoring the ongoing discussions and negotiations surrounding the company's future.
"They'll be looking at an investment rather than a purchase," – President Donald Trump
The impact of Trump's comments on potential future bids remains uncertain. The market's reaction suggests apprehension among investors regarding U.S. Steel's strategic direction and ownership prospects. As Cleveland-Cliffs attempts to capitalize on the situation created by Biden's blockade, questions linger on how these developments will ultimately shape the steel industry landscape.