Rival CEO Casts Doubt on Nippon Steel’s U.S. Steel Deal, Documents Reveal
Documents suggest a rival CEO influenced Wall Street’s view on Nippon Steel’s deal for U.S. Steel, raising concerns about its viability.
Nippon Steel, U.S. Steel, Cleveland-Cliffs, Lourenco Goncalves, Biden, Pennsylvania
Washington: So, it turns out that Nippon Steel’s big $14.9 billion bid for U.S. Steel was facing some serious skepticism. Not just from the Biden administration, but also from a surprising source—the CEO of Cleveland-Cliffs, Lourenco Goncalves. He was out there telling investors that the deal was doomed.
Goncalves, who had his own failed bid for U.S. Steel earlier, was on at least nine calls where he assured folks that President Biden would block Nippon’s merger. He even said things like, “I can’t force U.S. Steel to sell to me, but I can work my magic to make a deal that I don’t agree with not to close.” Talk about confidence!
And guess what? The day after he made those comments, Biden announced his opposition to the deal. CFIUS, the committee that reviews foreign investments for national security risks, couldn’t decide on the deal and passed it to Biden, who ultimately blocked it.
Interestingly, Goncalves didn’t want to comment when asked about it, and neither did Cleveland-Cliffs. U.S. Steel, on the other hand, is still fighting for the deal. The White House insisted that Goncalves’ comments didn’t influence Biden’s decision, saying it was all about national security concerns.
JP Morgan, which hosted some of these calls, didn’t say much either. But they did mention that Goncalves expected the deal wouldn’t go through. His comments seemed to have an impact, as they sometimes coincided with drops in U.S. Steel’s stock price.
Now, Cleveland-Cliffs has shown interest in making another bid. Goncalves has been at the helm for over a decade and believes that merging with U.S. Steel would create a stronger domestic supplier. But U.S. Steel is worried about antitrust issues, fearing it would give too much control over steel supply to one company.
Nippon Steel’s offer was actually worth double what Cleveland-Cliffs proposed, and they promised to invest in U.S. Steel’s aging mills. However, the deal got tangled in politics, with both Biden and Trump promising to block it to win over voters in Pennsylvania, where U.S. Steel is based.
In the end, it seems like Goncalves was pretty vocal about his doubts regarding the deal, and it might have played a role in how things turned out. It’s a wild situation, and it’ll be interesting to see what happens next.
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