U.S. Steel (X 6.48%) has been in the news for months since Japan’s Nippon Steel made a generous offer for the iconic American steelmaker. Nippon’s $14.9 billion bid in late 2023 represented a nearly 40% premium to U.S. Steel’s share price at the time.
But politicians on both sides of the aisle have joined the United Steelworkers (USW) union in voicing opposition to foreign ownership of the Pittsburgh-based company. Most recently, President Biden blocked Nippon’s $55-per-share cash bid on national security concerns.
Today, reports surfaced that fellow U.S. steelmakers Nucor and Cleveland-Cliffs are possibly planning a joint bid for U.S. Steel. That led shares of U.S. Steel to soar 9.4% by 12:30 p.m. ET.
Domestic steel companies swoop in
While shares jumped today, the stock is still well below the level of Nippon’s bid. That’s because the reported combined bid by Cliffs and Nucor is for a price in the high $30s per share, according to CNBC.
On the surface, the Nippon bid makes much more sense for U.S. Steel shareholders and other stakeholders. Nippon has committed to keeping the company name and keeping its headquarters in Pittsburgh. It also has pledged to invest more than $1.5 billion to modernize assets. Nippon would also provide technical expertise that both companies’ management groups believe would improve future competitiveness.
Over the past weekend, the Biden administration said it would delay until June the enforcement order to block the Nippon-U.S. Steel deal to review a legal challenge brought by the companies. Now a joint bid by Cliffs and Nucor has complicated the situation even further. Today’s reports say that Cliffs would make an all-cash purchase of U.S. Steel and subsequently sell off the Big River Steel subsidiary to Nucor.
Nucor reportedly has prior interest in Big River, which would fit in its steel mill portfolio nicely. It remains to be seen how this will all play out. If today’s reports pan out, though, Nucor and Cleveland-Cliffs could be the real winners.
