9 hours ago, 646empire said:

Yeah and America doesn’t want to start playing that game. Other countries could start blocking American companies too. Which is why regardless of the chatter the Biden Admin is unlikely to block this.

It's kind of a one-way street with Japan, though. Not many US acquisitions happen there. GM once owned about a 1/3 stake in Isuzu, but never controlled the company. In Japan, the Japanese like joint ventures and cooperative agreements, but not mergers; it's a different story overseas.

Based on public/political reaction, I think there is going to need to be a strong binding assurances from Nippon/U.S. Steel to give Biden cover to let the deal go through. I don't think our fond relations with Japan mean much to the voters Biden can't lose next year. And with both of PA's Democratic senators being strongly opposed, he doesn't have much wiggle room. I bet new national security, labor pieces will be introduced by the time this finishes.

 

Flip side, if it really drags on his numbers I could see Biden pushing to reject it, even though that would be unprecedented. 

 

I saw the CEO of Cliffs on CNBC the other day, and he made the point that even though they lost, this discussion is good for their industry because it gets investors and others thinking more about manufacturing as opposed to fixating on tech/AI, etc. It's notable this company many say is vital to our national security sold for far less than Twitter.

 

1 minute ago, coneflower said:

Based on public/political reaction, I think there is going to need to be a strong binding assurances from Nippon/U.S. Steel to give Biden cover to let the deal go through. I don't think our fond relations with Japan mean much to the voters Biden can't lose next year. And with both of PA's Democratic senators being strongly opposed, he doesn't have much wiggle room. I bet new national security, labor pieces will be introduced by the time this finishes.

 

Flip side, if it really drags on his numbers I could see Biden pushing to reject it, even though that would be unprecedented. 

 

I saw the CEO of Cliffs on CNBC the other day, and he made the point that even though they lost, this discussion is good for their industry because it gets investors and others thinking more about manufacturing as opposed to fixating on tech/AI, etc. It's notable this company many say is vital to our national security sold for far less than Twitter.

 

Wouldn't it be worse for PA if Cleveland-Cliffs were to buy US Steel? There would be greater job loss at HQ for sure. 

16 minutes ago, freefourur said:

Wouldn't it be worse for PA if Cleveland-Cliffs were to buy US Steel? There would be greater job loss at HQ for sure. 

 

KJP's article said their HQ has 800 employees. They have thousands of union workers in the state. The concern from the PA senators is that Nippon won't be a good partner with the union and those jobs could be at risk in the future or benefits could be eroded.

The situation brings to mind the 1989 partnership between Kawasaki Steel, a Japanese steel company, and Armco Steel. At that time, Armco was struggling to turn a profit, and these challenges continued even after forming AK Steel. It wasn't until AK Steel went public that they managed to reduce their debt, enabling them to expand and relocate their headquarters back to Middletown, Ohio, after a brief stint in Pittsburgh. In 1999, Kawasaki Steel went on to acquire Armco.

 

This partnership likely saved Armco in the long run. Previously, the company had suffered due to the influx of cheaper foreign steel from Japan. However, under Kawasaki Steel's management, certain strategic decisions were made, such as halting investments in some facilities, like Ashland Works, and partially shutting down others, like Dearborn Works. There were also issues of institutional decay and aging infrastructure at Armco's facilities. The Rockport Works in Indiana, a newer cold mill facility, stood out for its distinct culture and operational approach compared to Armco's other sites.

 

While some in the steel heritage forums I frequent lament the sale of a symbol of American steelmaking strength to a foreign competitor, others are more indifferent, considering U.S. Steel's contentious history with labor relations and operations. USX has significantly reduced its steelmaking presence in Pittsburgh, retaining only the Mon Valley Works, which last saw major upgrades at its Edgar Thompson Steel Works about two decades ago. A planned $1 billion upgrade was canceled due to environmental regulators that want to see all major steelmaking end in Pittsburgh.

 

I wonder what Nippon will do first. Granite City will most likely close for good and it'll probably sell or close off the rest of its tubular operations in Lorain.

1 minute ago, seicer said:

The situation brings to mind the 1989 partnership between Kawasaki Steel, a Japanese steel company, and Armco Steel. At that time, Armco was struggling to turn a profit, and these challenges continued even after forming AK Steel. It wasn't until AK Steel went public that they managed to reduce their debt, enabling them to expand and relocate their headquarters back to Middletown, Ohio, after a brief stint in Pittsburgh. In 1999, Kawasaki Steel went on to acquire Armco.

 

This partnership likely saved Armco in the long run. Previously, the company had suffered due to the influx of cheaper foreign steel from Japan. However, under Kawasaki Steel's management, certain strategic decisions were made, such as halting investments in some facilities, like Ashland Works, and partially shutting down others, like Dearborn Works. There were also issues of institutional decay and aging infrastructure at Armco's facilities. The Rockport Works in Indiana, a newer cold mill facility, stood out for its distinct culture and operational approach compared to Armco's other sites.

 

While some in the steel heritage forums I frequent lament the sale of a symbol of American steelmaking strength to a foreign competitor, others are more indifferent, considering U.S. Steel's contentious history with labor relations and operations. USX has significantly reduced its steelmaking presence in Pittsburgh, retaining only the Mon Valley Works, which last saw major upgrades at its Edgar Thompson Steel Works about two decades ago. A planned $1 billion upgrade was canceled due to environmental regulators that want to see all major steelmaking end in Pittsburgh.

 

I wonder what Nippon will do first. Granite City will most likely close for good and it'll probably sell or close off the rest of its tubular operations in Lorain.

Would the tube ops in Lorain be a good pickup for Cliffs?  

Lawmakers push to stop ‘fundamentally troubling’ sale of US Steel

 

https://thehill.com/business/4367961-lawmakers-push-to-stop-fundamentally-troubling-sale-of-us-steel/

 

The United Steelworkers union said the proposed deal already constitutes a violation of the union’s agreement with management and that it’s relying on regulators to scrutinize it closely.

“Neither U.S. Steel nor Nippon reached out to our union regarding the deal, which is in itself a violation of our partnership agreement that requires U.S. Steel to notify us of a change in control or business conditions,” union President David McCall said in a statement Monday.

20 hours ago, 646empire said:

Yeah and America doesn’t want to start playing that game. Other countries could start blocking American companies too. Which is why regardless of the chatter the Biden Admin is unlikely to block this.

 

I agree. I'm not sure if there would be some way for the Biden administration to enforce the promises that they will honor union agreements, but if so, that would go a long way. 

Also, from what I understand, Nippon already owns several entities in the US which are unionized- at least according to them- so it doesn't seem like they are automatically hostile to unions in the first place. 

Edited December 20, 20231 yr by jonoh81

this deal cannot be viewed in a short window.... currently the deal is over valued because Trump created protectionist policies and Biden created increased demand for domestic steel here at home... those scenarios have driven up the short term value of US Steel.

 

But play this out 3,4,5 years from now.  Inevitably, those situations will change.  Even a few short years of disinvesting in the US steel plants, allowing the workforce to drop 10-20% or more through attrition, encouraging early retirements, etc....   this is a business that cannot be ramped back up quickly.  Steel is needed for tanks, planes, trucks, roads, bridges, buildings....  it's not a partisan issue or a union issue, it's a fundamental infrastructure/stability issue.  Are we going to allow one of our most critical domestic supply chains be sold off in free market economics?   Not sure what else compares besides maybe agriculture and energy production....

Edited December 20, 20231 yr by gottaplan

2 hours ago, Cleburger said:

Would the tube ops in Lorain be a good pickup for Cliffs?  

 

Probably not. Cliffs has just two tubular operations in Columbus (Indiana) and Walbridge (Ohio) which are more focused on the automotive and industrial sectors. The only gain for Cliffs with Lorain is the manufacture of seamless pipe for the oil/gas industries which is more cyclical. Even in the best of times, USX had issues keeping Lorain Works going; other upstarts in the industry were able to cut down its profit margins. It's main benefit was being next to the steelmaking side of operations but when that ceased, USX had fewer benefits of keeping Lorain Works going.

3 hours ago, coneflower said:

 

KJP's article said their HQ has 800 employees. They have thousands of union workers in the state. The concern from the PA senators is that Nippon won't be a good partner with the union and those jobs could be at risk in the future or benefits could be eroded.

I wonder since Nippon doesn't have a large presence in the US that they'd be more likely to keep most of the plants open. However, Cliffs might have duplicative plants that they could shut down. I'm just thinking that a domestic buyer might not necessarily be better for the union employees. 

On 12/20/2023 at 9:47 AM, seicer said:

The situation brings to mind the 1989 partnership between Kawasaki Steel, a Japanese steel company, and Armco Steel. At that time, Armco was struggling to turn a profit, and these challenges continued even after forming AK Steel. It wasn't until AK Steel went public that they managed to reduce their debt, enabling them to expand and relocate their headquarters back to Middletown, Ohio, after a brief stint in Pittsburgh. In 1999, Kawasaki Steel went on to acquire Armco.

 

This partnership likely saved Armco in the long run. Previously, the company had suffered due to the influx of cheaper foreign steel from Japan. However, under Kawasaki Steel's management, certain strategic decisions were made, such as halting investments in some facilities, like Ashland Works, and partially shutting down others, like Dearborn Works. There were also issues of institutional decay and aging infrastructure at Armco's facilities. The Rockport Works in Indiana, a newer cold mill facility, stood out for its distinct culture and operational approach compared to Armco's other sites.

 

While some in the steel heritage forums I frequent lament the sale of a symbol of American steelmaking strength to a foreign competitor, others are more indifferent, considering U.S. Steel's contentious history with labor relations and operations. USX has significantly reduced its steelmaking presence in Pittsburgh, retaining only the Mon Valley Works, which last saw major upgrades at its Edgar Thompson Steel Works about two decades ago. A planned $1 billion upgrade was canceled due to environmental regulators that want to see all major steelmaking end in Pittsburgh.

 

I wonder what Nippon will do first. Granite City will most likely close for good and it'll probably sell or close off the rest of its tubular operations in Lorain.

That’s not exactly what happened with ARMCO.  Essentially, in 1989, ARMCO created a joint venture with Kawasaki Steel called ARMCO Steel Corporation, LP, that remained based in Middletown.  This 50/50 limited partnership consisted of ARMCO’S cold-rolled steel operations (Middletown and Ashland Works), and let ARMCO, Inc, (which had already relocated its HQ to NJ) focus more on stainless and electrical steel.  ARMCO ended up with HQ in Pittsburgh due to their merger with Clyclops in the early 1990s.

 

Around 1993, ARMCO Steel Corporation, LP was spun-off into a publicly traded company headquartered in Middletown called AK Steel.  Both ARMCO and Kawasaki retained ownership shares for several years.

 

AK Steel built the Rockport Works, and in 1999 acquired what was left of ARMCO, retaining the HQ in Middletown until 2007 in the same building ARMCO had been headquartered in for decades.  

 

It is a very interesting business case study. 

 

My dad was a long time ARMCO employee and is an AK Steel retiree (pre-Cliffs).  It does appear they still have an office in West Chester (I believe the signage still says AK) but they have completely rebranded the Middletown Works—including the engines that run in the plant.  Cliffs retained the brand-new Research Center (also rebranded) that AK had constructed along I-75 in Middletown a couple of years ago.  There is plenty of land to expand, and if they were looking to downsize their regional office in SW Ohio, consolidation near one of its strategic plants and research center would make a lot of sense.

 

This is not a politics thread.  Any discussion of politics needs to stay TIGHT to the topic of Cleveland-Cliffs.

Lots of Cliffs in this piece....

 

 

US Steel deal stokes fiery stakeholder standoff

https://www.reuters.com/breakingviews/us-steel-deal-stokes-fiery-stakeholder-standoff-2024-01-17/

 

If this buyout goes through l wonder if Nippon overpaid or Cliffs underbid?

Nippon overpaid.

8 hours ago, LibertyBlvd said:

Nippon overpaid.

Totally agree.  I thought Cliffs' initial offer was generous. 

When you overbid, you want something more than what can be justified from a business perspective. Nippon wants something more, such as end-around US tariffs. Or perhaps it's something else? Whatever it is, it makes me nervous.

https://www.crainscleveland.com/manufacturing/nippons-sweetened-offer-final-hours-clinched-us-steel-deal

 

Apparently, Cliffs was offering $54 dollar per share (cash+ stock), but was outbid at the last moment. 

lol looks like Cliffs is going to keep needling US Steel until the government decides whether or not to allow the deal to go thru

I'm not well versed enough in the subject to know if the Nippom buyout is good or bad for the American steel business so l'll just opine in my ignorance, l'm hoping Cliffs wins out in the end, although that does appear to be a longshot at this point.

Cliffs made a new offer for US Steel yesterday where they said it is better than Nippons. It aint over yet!

23 minutes ago, WindyBuckeye said:

Cliffs made a new offer for US Steel yesterday where they said it is better than Nippons. It aint over yet!

1 hour ago, Ineffable_Matt said:

Cliffs must have some advice that the administration won't oppose the merger, although it seems exactly like the kind of deal that FTC and Justice WOULD oppose.

 

The potential Cliffs-USS monopoly on electric steel can apparently be avoided by the use of readily available amorphous steel.

https://labortribune.com/united-steelworkers-union-files-grievances-over-u-s-steels-plan-to-sell-to-japans-nippon-steel/

6 hours ago, WindyBuckeye said:

Cliffs made a new offer for US Steel yesterday where they said it is better than Nippons. It aint over yet!

 

Where are you seeing this?

48 minutes ago, GISguy said:

 

Where are you seeing this?

It was in Crains yesterday-online.

21 minutes ago, Htsguy said:

It was in Crains yesterday-online.

 

I've read the article, aside from being quoted as "we believe the saga is not over", they have not made any other offer at the company.

 

They spent a bunch of the earnings call explaining their bid as "Company D" and value of said bid ($54/share).

 

From Cle dot com:

While the Nippon Steel offer was all cash, Cleveland-Cliffs was offering $27 of cash, $27 of stock and $6.50 of potential cost-savings for each share, Cliffs executives said. Celso and CEO Lourenco Goncalves said that made Cleveland-Cliffs offer worth more than $60 a share.

 

Crains:

An insistent and indignant Goncalves, along with his son and CFO Celso Goncalves, used much of the company’s quarterly conference call with investors on Tuesday, Jan. 30 to tell analysts and others, “We believe the saga is not over.”

 

While he didn’t get into specifics about how his company plans to still defeat rival Nippon, Goncalves was insistent that his offer represented a better deal to U.S. Steel shareholders, its employees and the U.S. generally.

Edited January 31, 20241 yr by GISguy

1 hour ago, GISguy said:

 

I've read the article, aside from being quoted as "we believe the saga is not over", they have not made any other offer at the company.

 

They spent a bunch of the earnings call explaining their bid as "Company D" and value of said bid ($54/share).

 

From Cle dot com:

While the Nippon Steel offer was all cash, Cleveland-Cliffs was offering $27 of cash, $27 of stock and $6.50 of potential cost-savings for each share, Cliffs executives said. Celso and CEO Lourenco Goncalves said that made Cleveland-Cliffs offer worth more than $60 a share.

 

Crains:

An insistent and indignant Goncalves, along with his son and CFO Celso Goncalves, used much of the company’s quarterly conference call with investors on Tuesday, Jan. 30 to tell analysts and others, “We believe the saga is not over.”

 

While he didn’t get into specifics about how his company plans to still defeat rival Nippon, Goncalves was insistent that his offer represented a better deal to U.S. Steel shareholders, its employees and the U.S. generally.

Crains Linked in literally said it in a post so must have been misleading. Now I can't even trust that social media.

21 hours ago, WindyBuckeye said:

Crains Linked in literally said it in a post so must have been misleading. Now I can't even trust that social media.

 

Lol maybe that's why this came out just now, seems like they caused a bunch of confusion:

 

 

he was on one of the business shows kinda saying that the deal might not go thru, but they aren't hanging around holding the same offer

https://minnesotareformer.com/2024/02/06/the-steelworkers-strike-back-cleveland-cliffs-stands-to-gain/

 

accordin to some analysis, cliffs still has a non-zero chance of pulling off a deal.

Biden came out against it, 

 

“It is important that we maintain strong American steel companies powered by American steel workers,” said a statement Biden released Thursday.

“I told our steel workers I have their backs, and I meant it,” it continued. “U.S. Steel has been an iconic American steel company for more than a century, and it is vital for it to remain an American steel company that is domestically owned and operated.”

 

https://www.cleveland.com/news/2024/03/president-joe-biden-weighs-in-on-us-steel-purchase-by-japanese-company.html?outputType=amp

On 2/6/2024 at 11:47 PM, Whipjacka said:

https://minnesotareformer.com/2024/02/06/the-steelworkers-strike-back-cleveland-cliffs-stands-to-gain/

 

accordin to some analysis, cliffs still has a non-zero chance of pulling off a deal.

 

That was an interesting read, thanks.

Cleveland-Cliffs CEO may consider rebidding for US Steel in $30s a share -analyst (update) (msn.com)

 

https://www.msn.com/en-us/money/markets/cleveland-cliffs-ceo-may-consider-rebidding-for-us-steel-in-30s-a-share-analyst-update/ar-BB1jSVaB?ocid=entnewsntp&pc=U531&cvid=84b4e6bd99374b5ba1567f4c11cc4472&ei=15

 

 

Well hey, the Federal government got heavily involved when Pittsburgh's PNC gobbled up Cleveland's National City ... perhaps it's time to throw us a bone and return the favor. 

On 3/14/2024 at 12:14 PM, GISguy said:

Biden came out against it, 

 

“It is important that we maintain strong American steel companies powered by American steel workers,” said a statement Biden released Thursday.

“I told our steel workers I have their backs, and I meant it,” it continued. “U.S. Steel has been an iconic American steel company for more than a century, and it is vital for it to remain an American steel company that is domestically owned and operated.”

 

https://www.cleveland.com/news/2024/03/president-joe-biden-weighs-in-on-us-steel-purchase-by-japanese-company.html?outputType=amp

Take Election Year talk with a grain of salt. Politics is playing a HUGE role in M&A right now. From JetBlu to Kroger, to TikTok and deals like this one in between. A Mess.  
 

A great option piece in the WSJ that hits on it.

 

” The American political consensus used to be that foreign investment is a sign of U.S. economic strength and a source of good-paying jobs. Protectionists focused on blocking imported goods that compete with American products. But now they’re targeting even investment in U.S. manufacturing from friendly countries.“

 

https://www.wsj.com/articles/joe-biden-nippon-steel-japan-u-s-steel-cleveland-cliffs-b12a5e6c

 

Edited March 15, 20241 yr by 646empire

No idea what will happen here but U.S. Steel is trading about 30% below the Nippon Steel offer price and about 15% below where it was before Biden's comments. So the market definitely does not see the Nippon Steel deal as a sure thing.

It ain't over til it's over.

8 hours ago, 646empire said:

Take Election Year talk with a grain of salt. Politics is playing a HUGE role in M&A right now. From JetBlu to Kroger, to TikTok and deals like this one in between. A Mess.  
 

A great option piece in the WSJ that hits on it.

 

” The American political consensus used to be that foreign investment is a sign of U.S. economic strength and a source of good-paying jobs. Protectionists focused on blocking imported goods that compete with American products. But now they’re targeting even investment in U.S. manufacturing from friendly countries.“

 

https://www.wsj.com/articles/joe-biden-nippon-steel-japan-u-s-steel-cleveland-cliffs-b12a5e6c

 

If by "politics is playing a HUGE role" you mean, "Biden administration is actually enforcing anti-trust laws", then yes, you are correct.

I've heard from Cliffs execs that they don't view the fight for US Steel as over. Perhaps that's wishful thinking, but that's what is their thinking.

I think it's more than wishful thinking if just a couple of things work in our (Cleveland) favor. 

 

If the politics continue both presidential candidates are on record as opposing the Nippon buy and it wouldn't be unsurprising to see Congress chime in too. The other thing is the financials are looking better for Cliffs too. Anyway, a guy can hope can't he?

FWIW an old colleague of mine works for a steel company that’s not involved in this takeover. Talking to him last week, he says word on the street in the industry is that it’s far from over. 

Cleveland Cliffs will get up to $575 million in DOE grants to accelerate decarbonization in steelmaking:

 

Quote

CLEVELAND--(BUSINESS WIRE)-- Cleveland-Cliffs Inc. (NYSE: CLF) announced today that two of its projects have been selected for award negotiations for up to $575 million in total funding from the United States Department of Energy (DOE) to pursue two decarbonization investments at Middletown Works in Ohio and Butler Works in Pennsylvania. Following successful negotiations, these projects will allow for substantial reductions in greenhouse gas (GHG) emissions across the Cliffs’ footprint and will also create efficiencies that meaningfully drive down operating costs while securing and growing good-paying Union jobs. This federal funding is being made available through DOE’s Industrial Demonstrations Program funded through the Infrastructure Investment and Jobs Act and the Inflation Reduction Act.

 

https://www.clevelandcliffs.com/news/news-releases/detail/629/cleveland-cliffs-selected-to-receive-575-million-in-us

Cleveland Cliffs News. https://www.news5cleveland.com/news/local-news/cleveland-cliffs-ceo-says-hes-still-interested-in-acquiring-u-s-steel-but-no-bid-is-on-the-table

https://finance.yahoo.com/news/automakers-urge-white-house-oppose-173957540.html

 

To be honest, I have mixed emotions about this one.  I don't like monopolies but I also don't like the idea of key US manufacturing capabilities being held by a foreign nation (even if it is one that is currently an ally).

Cross posted in the office developments thread

 

 

Cleveland-Cliffs is in talks to buy U.S. plants of Russia’s NLMK

 

"Cleveland-Cliffs Inc. is in talks to acquire the U.S. Midwest assets of Russia’s largest steelmaker Novolipetsk Steel PJSC, according to people familiar with the matter. New York-listed Cliffs has expressed interest in a potential deal to NLMK, as the steelmaker is also known, the people said, asking not to be identified because the matter is private. Some of the people said that Cliffs has signed a non-disclosure agreement. The assets, which consists of steel-mill facilities in Indiana and Pennsylvania, could be valued at more than $500 million in a potential sale, they added...."

 

https://www.crainscleveland.com/manufacturing/cleveland-cliffs-eyes-purchase-us-plants-russias-nlmk

On 3/27/2024 at 9:29 PM, simplythis said:

Cleveland Cliffs News. https://www.news5cleveland.com/news/local-news/cleveland-cliffs-ceo-says-hes-still-interested-in-acquiring-u-s-steel-but-no-bid-is-on-the-table

 

US Steel's FB page is full of posts about how great it will be when Nippon takes over, the comments sections have a different viewpoint.

20 minutes ago, E Rocc said:

 

US Steel's FB page is full of posts about how great it will be when Nippon takes over, the comments sections have a different viewpoint.

 

Similarly, I've seen a lot of their (USX) ads on twitter these days advocating for Nippon deal ("KEEP JOBS IN PITTSBURGH").  Comments are the same as their FB.

Cleveland-Cliffs to buy Canadian steelmaker Stelco in $2.5 billion deal

https://ca.finance.yahoo.com/news/cleveland-cliffs-acquire-stelco-2-101141593.html