Is the future of U.S. Steel at a fork in the road?
More than a week after blocking the almost $15 billion sale of U.S. Steel to Japanese-based Nippon Steel, President Joe Biden’s administration made a puzzling last-minute pivot.
He could have just left things where they were, with the companies having a 30-day deadline to certify that the deal was dead, leaving any next steps to President-elect Donald Trump. Trump has been just as adamantly opposed to the sale as Biden and many other elected officials of both parties.
But the Committee on Foreign Investment in the United States kicked the can further down the road, setting a new deadline of June 18.
U.S. Steel and Nippon Steel have gone to federal court to find a way around the president’s block. This allows more time for that to play out.
The joint statement from the companies makes it clear they are not looking for more time to wrap up loose threads as they head in different directions.
“We look forward to completing the transaction, which secures the best future for the American steel industry and all our stakeholders,” the statement read.
But that’s just one possible path. The other may lead in a different direction.
On Monday, Cleveland-Cliffs CEO Lourenco Goncalves said his company would up the $7.3 billion offer it made in 2023 to a package of $14.7 billion in cash and stock.
Cleveland-Cliffs is the second-largest steel manufacturer in the nation, behind Nucor and ahead of U.S. Steel. Nippon is the fourth-largest producer globally.
The Nippon deal was more than double the Cleveland-Cliffs offer when the Japanese firm stepped forward in December 2023. However, given the opposition to the international deal on national security grounds, a difference of just $200 million might be more attractive because of its expediency.
Both paths are paved with harsh words and bad feelings at this point. U.S. Steel CEO David Burritt was disrespectful to Biden and conciliatory to Trump, the man who will have decision-making power come Monday.
“The president can step in now and undo the wrongful, shameful, corrupt actions of Biden,” Burritt said in what seemed a deliberate snub of Biden. “We understand what (Trump’s) current views are, but he’s a smart guy. He has the opportunity to have fresh eyes and do what’s right, and I believe strongly he will.”
Meanwhile, Goncalves spent his news conference maligning Biden for not shutting down the sale sooner, as well as directing venom at Nippon. In addition to saying Japan is worse about unfair trade than the often-maligned China, he invoked the shadow of World War II.
“You did not learn anything since 1945,” he said.
The question is which path is better for shareholders, steelworkers and the steel mill communities — and whether there is just one path that will serve them all.
