CLEVELAND, Ohio — Cleveland-Cliffs executives made it clear Tuesday that they’re still interested in buying U.S. Steel, but at a much lower price than they offered last year.
And after President Joe Biden’s public comments about stopping the sale to Tokyo-based Nippon Steel, Cliffs’ also sees itself as U.S. Steel’s only other option.
“The Nippon deal is dead and other buyers stand no chance to close a deal,” Cliffs Chief Financial Officer Celso Goncalves said during an earnings call Tuesday.
He added “A company is only worth what a real buyer or investor is willing to pay for it.”
Cliffs executives have been publicly rebuking the deal since January, saying U.S. Steel being sold to a Japanese steelmaker is bad for American interests and American workers. Nippon Steel in December beat Cliffs in a bidding war to buy U.S. Steel.
Since then, both of Ohio’s senators, Sherrod Brown and JD Vance, and the Biden Administration have criticized the deal. Biden told a crowd of union steelworkers in Pittsburgh last week that he may block it, according to the Associated Press.
Nippon Steel plans to buy U.S. Steel for $55 per share, or $14.1 billion. Cliffs offered $54 per share during the bidding war, after an initial offer of $7.3 billion in July.
Both Cliffs CEO Lourenco Goncalves and the chief financial officer, Lourenco’s son, Celso Goncalves, acknowledged that U.S. Steel ultimately doesn’t have to sell to Cliffs, and it could remain a stand-alone company if the Nippon Steel sale falls through. But they described Cliffs as the only viable buyer.
Cliffs executives went on to say that if they did pursue U.S. Steel a second time, they would have to redo their due diligence before making a new offer.
Lourenco Goncalves also told investors that he made another offer to buy just part of U.S. Steel, not revealing the price offered.
He said during the call that, through bankers representing the companies, he offered to buy just the unionized parts of U.S. Steel while allowing Nippon Steel to buy the non-union assets of the company. Nippon Steel never replied to the offer, he said.
He said that offer is now off the table, as he expects Biden to block the deal.
“At this point the president of the United States already said what he is going to do,” Lourenco Goncalves said.
U.S. Steel, in its own regulatory filing where it detailed the bidding war, said it felt a deal with Cliffs may not be approved because of antitrust issues.
A Cliffs/U.S. Steel combination could have effectively controlled the U.S. iron ore market and would have likely supplied more than half the steel used by U.S. automakers. Cliffs executives said they had planned changes that would have let this deal be approved by regulators.
Cliffs bought AK Steel for $3 billion and ArcelorMittal’s USA operations for $3.3 billion, both in 2020. The company used to be primarily in the iron ore business but has transformed itself into a vertically integrated steel maker through acquisitions.
Cliffs on Monday also announced a $1.5 billion stock buyback program, saying the best use of its cash right now is buying up its on shares.
Cliffs reported a net loss of $53 million in the first three months of 2023, with an adjusted net income of $87 million. Sales to automotive customers increased, but many service centers went on a buyers strike in the first quarter, cutting into total sales, Cliffs reported in its earnings’ presentation.
Cliffs also paid a $202 million in one-time expense during the quarter because it idled it Weirton tinplate plant in West Virginia.
Sean McDonnell is the business reporter for cleveland.com and the Plain Dealer. You can reach him at smcdonnell@cleveland.com.