US Steel, Nippon deal has 'zero' chance of closing without union support: Cliffs CEO

The acquisition of US Steel by Japan's Nippon Steel has "zero chance to close" without union support, Cleveland-Cliffs CEO Lourenco Goncalves said May 14.

"The president of the United States has made it abundantly clear that he supports the union and he supports American ownership," Goncalves said during a press event at the American Iron and Steel Institute's annual general meeting in Washington. "There is absolutely no doubt about where President Biden stands. The fact that the Japanese government knows that but Nippon Steel is still saying that they are pursuing the acquisition of US Steel is not only mind-boggling, it is insulting to a lot of people in this country and I'm not sure why they are still doing that."

US Steel confirmed in August that it had received unsolicited acquisition proposals from Cliffs and other parties, thus triggering a strategic review process. In December, the Pittsburgh-based steel producer accepted an all-cash bid from Nippon valued at $14.1 billion and $55 per share, with a total enterprise value of $14.9 billion when accounting for Nippon's assumption of debt.

However, Nippon's proposed acquisition of US Steel, which is currently proceeding through customary regulatory approvals, has met with opposition from union workers and many political leaders, most of which have cited disagreement at the prospect of a foreign company purchasing a US steelmaker.

"The deal cannot close without union support, even though the seller US Steel [and] the US Steel board have a different opinion," Goncalves said, noting the United Steelworkers union transferred its "right to bid" under its labor agreement with US Steel to Cliffs.

US Steel has said previously that the USW does not have the right to veto any deal for the company.

"During the entire process I explained in exhausting details why they were wrong and they elected not to hear, so now they are paying the price of not paying attention, not hearing," Goncalves said. "The other thing I made abundantly clear during the process [is] that I have full support from the US government and it would be a silly movement to wait for the election in hope that a different outcome will be allowed to them because I also have support from President Trump, personal support."

During a speech at the USW headquarters in April Biden said US Steel "should remain a totally American company," while former US president Donald Trump, the presumptive Republican nomination for the 2024 Presidential election, said in February he would "absolutely" block Nippon's purchase of US Steel should he be re-elected.

"It's like a sick patient that sits on a bed with a bunch of tubes and sensors in them, it is still alive or what?" Goncalves said. "The current deal needs to be completely blocked."

When asked if he would support the acquisition of US Steel by another American-owned company, Goncalves said that is up for the US Steel board to decide.

"If they decide to sell to another American steel company, it's their discretion," he said. "If they decide to sell to Cliffs, which I don't believe they will, it's their discretion. But what I will tell you is that the current deal has zero chance to close because the President of the United States already stated this position."

A request for comment to US Steel was not immediately returned May 14.