Cliffs CEO Still Keen on US Steel as Doubts Linger on Nippon Deal

(Bloomberg) -- Cleveland-Cliffs Inc. still wants to buy United States Steel Corp. or some of its assets if US authorities block Nippon Steel Corp.’s $14.1 billion takeover of the iconic American steelmaker.

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“If possible I will buy the entire thing, but my interest is laser-focused on the union-represented assets, 100%,” Cliffs Chief Executive Officer Lourenco Goncalves said Thursday in a phone interview.

Confirmation that the combative Cliffs CEO remains interested is the latest twist in a months-long battle over the fate of US Steel, which has drawn considerable attention from politicians and the White House. Goncalves reiterated his view that Nippon Steel’s takeover is doomed given its lack of union support and as authorities look to keep a “foundational” industry in American hands.

Read More: Cliffs Weighs Lowball Bid for US Steel With Union Backing

Goncalves lost a bidding war to Nippon Steel in December, but he expects the administration will block that deal, possibly via executive order. It’s not entirely clear how that could happen. The transaction is also subject to a national security review despite Japan being a close ally.

Nippon Steel declined to comment, referring to previous remarks that its transaction delivers clear benefits to US Steel, union workers, the broader American steel industry and US national security.

Goncalves said he’s had no direct contact with Nippon Steel and vowed not to do any deal with the Japanese firm. He has said that a previous proposal to Nippon Steel that would see Cliffs buy US Steel’s union-represented assets while the Japanese company takes the rest is off the table. It’s unclear if that type of arrangement would present antitrust issues.

“It’s clear that I still have interest,” he said of acquiring US Steel, “but that will be in a completely different basis because at this point I don’t even know what’s there anymore.”

No Contact

Goncalves spoke following a screening of a documentary highlighting Cliffs’ efforts to uplift the Midwest industrial base. The United Steelworkers hosted the event and attendees included union president David McCall.

Speaking to Bloomberg by telephone, McCall reiterated his opposition to Nippon Steel’s takeover on the grounds that its assurances of keeping US Steel plants running and people working are conditional to broader business plans that tend to change. The USW also sees national defense concerns from the replacement of blast furnaces with electric arc plants on the grounds that it could restrict military-grade steel production.

McCall said he’s had no contact with Nippon Steel for a couple of weeks. “And I don’t intend to reach out to them because I’m not interested in their transaction.”

“At the end of the day, if this transaction fails, like it should, it will be up to Cleveland-Cliffs to determine whether or not they want to step back into it, and whether or not the stockholders would be satisfied with whatever offer they might make,” McCall said.

--With assistance from Josh Wingrove.

(Adds comment from union leader in last three paragraphs)

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