Twist in Nippon Steel-U.S. Steel Deal as American Giants Pursue Joint Bid

Twist in Nippon Steel-U.S. Steel Deal as American Giants Pursue Joint Bid
Published on: Jan 13, 2025

Reports emerged today that U.S. steel manufacturers Cleveland-Cliffs (NYSE: CLF) and Nucor (NYSE: NUE) are planning a joint bid for the renowned American steelmaker U.S. Steel (NYSE: X). This news caused U.S. Steel’s stock to soar by 9.4% by 12:30 p.m. ET.

For months, Japan’s Nippon Steel has been in the news for proposing a generous acquisition offer for U.S. Steel, a bid that has put U.S. Steel’s stock in the spotlight. Nippon Steel’s bid of $14.9 billion at the end of 2023 represented nearly a 40% premium over U.S. Steel’s share price at the time. However, U.S. political leaders and the United Steelworkers (USW) union have opposed the notion of foreign ownership of the company. Recently, President Biden blocked Nippon Steel’s all-cash offer on the grounds of national security concerns.

Furthermore, Trump has also voiced opposition to Nippon Steel’s acquisition of U.S. Steel.

Domestic Steel Giants Step In

Despite today’s stock surge, it remains well below Nippon Steel’s offer price of $55 per share. According to CNBC, the combined bid from Cleveland-Cliffs and Nucor is in the high $30s per share. U.S. Steel’s current stock price stands at $36.34, up by 6.13% (or $2.10) for a market cap of $8 billion.

Cleveland-Cliffs is the largest producer of flat-rolled steel in North America, managing an extensive network of mines and shipping routes across the Great Lakes region. North Carolina-based Nucor, the largest steel producer in the United States and a leading scrap recycler in North America, operates numerous facilities in the U.S., Canada, and Mexico.

On the surface, Nippon Steel’s offer appears more beneficial to U.S. Steel’s shareholders and other stakeholders. Nippon Steel has committed to retaining the company name and keeping its headquarters in Pittsburgh. It has also pledged to invest over $1.5 billion in modernizing U.S. Steel’s assets, bringing technical expertise expected to boost the company’s future competitiveness.

Over the weekend, the Biden administration announced that it would delay the order blocking Nippon Steel’s acquisition of U.S. Steel until June, to review the legal challenge brought by the companies. Now, the joint bid by Cleveland-Cliffs and Nucor adds another layer of complexity to the situation. Today’s reports suggest that Cleveland-Cliffs would make an all-cash purchase of U.S. Steel and subsequently sell its Big River Steel subsidiary to Nucor.

Nucor has previously shown interest in Big River Steel, viewing it as a good fit for its steel mill portfolio. It’s uncertain how the situation will resolve, but if today’s reports hold true, Nucor and Cleveland-Cliffs could emerge as the real winners in this corporate saga.

Iron M&A Steel