WASHINGTON—Nippon Steel Corp. faced skepticism about the Biden administration’s $14.9 billion bid to buy U.S. Steel, while also battling headwinds from unforeseen sources. The CEOs of the company’s rival bidders had repeatedly questioned the prospects for the deal. To all investors.
Lourenco Goncalves, CEO of Cleveland-Cliffs, the steelmaker whose $7 billion takeover bid for U.S. Steel fell through in August 2023, has participated in at least nine conference calls and said Friday , assured investors that President Joe Biden would halt the Nippon Steel merger months ago. A summary of investor calls included in a Dec. 17 letter from lawyers for Nippon Steel and U.S. Steel to the Committee on Foreign Investment in the United States (CFIUS) confirmed the following: Two people who took part in the conference call told Reuters.
“We can’t force U.S. Steel to sell, but we can work our magic to get a deal we can’t agree to,” he told investors on a March 13 conference call hosted by JPMorgan. . He quoted Gonsalves.
“It’s not over yet and Mr. Biden hasn’t spoken yet. He will.”
The next day, Biden announced his opposition to the partnership.
CFIUS, which reviews foreign investments in the United States for national security risks, was unable to reach an agreement on whether to greenlight the Nippon Steel deal, referring the matter to Biden in late December and announcing Friday’s The block is ready.
Gonsalves declined to comment, and a representative for the Cleveland Cliffs did not respond to a request for comment. Nippon Steel and the Ministry of Finance, which heads CFIUS, also declined to comment. In response to questions for this article, U.S. Steel said the company will continue to fight for this deal. The White House said neither Mr. Gonsalves nor his comments were involved in Mr. Biden’s decision to abandon the deal. The government said Friday that the proposed purchase raises national security concerns.
JPMorgan declined to comment, but mentioned the incident with Gonsalves in a note to clients summarizing a March 2024 industrial conference, saying “management reiterated its expectation that the deal would not close.” said. Participants in the call echoed Gonsalves’ prediction that Biden would soon take aim at the deal.
Gonsalves made similar comments about the deal to analysts during three earnings calls this year, but his personal comments about the deal process throughout 2024 cast doubt on the Japanese-made acquisition of U.S. Steel. This shows the extent of Mr. Gonsalves’ efforts to achieve this goal. Nippon Steel and U.S. Steel told CFIUS that his comments were made in advance of a decline in U.S. Steel’s stock price.
The Cleveland Cliffs had previously expressed interest in making another bid.
The steelmaker, led for more than a decade by Brazilian-born Mr. Gonçalves, made a unilateral bid for U.S. Steel with support from the United Steelworkers union, saying that a combined company would be “lower cost and more innovative.” “This will create stronger domestic companies.” supplier. “
However, U.S. Steel has argued that the partnership with Cleveland-Cliffs would consolidate steel supplies to U.S. automakers and put up to 95% of U.S. iron ore production under one company’s control, making it subject to antitrust regulations. They expressed concern that they were at risk of being removed by the authorities. U.S. Steel’s board of directors rejected the proposal.
Nippon Steel’s all-cash offer in December was valued at double Cleveland-Cliffs’ price, after which Nippon Steel pledged to revitalize U.S. Steel’s aging plant with investment from allies.
But the proposal has become politicized, with Biden and Republican President-elect Donald Trump pledging to scrap the deal while persuading voters in the battleground state of Pennsylvania, where U.S. Steel is headquartered.
After USW President David McCall expressed opposition to the partnership, both Mr. Trump and Mr. Biden argued that the company should remain U.S.-owned.
In a letter obtained by Reuters last month that also included summaries of Gonsalves’ calls with investors, the companies said the White House’s “unacceptable and undue influence” on CFIUS’ national security review of the partnership due to Biden’s objections. ” is claimed to have led to this.
Mr. Gonsalves previously claimed that CFIUS was considering the merits of the agreement.
He made the remarks during a March 15 call with a major U.S. Steel investor, which was confirmed by a participant in the call. This is not a process. CFIUS is just a front for the president to kill deals. CFIUS is a collection of second- and third-level bureaucrats within the Cabinet…which means the president can do whatever he wants. ”
