Cleveland Cliff offers to buy USS

[Guest]

The Northwest Indiana Times has a article on the proposed acquisition of US Steel by Cleveland Cliffs where analysts mention the very real possibility of antitrust issues (monopoly), and that such a merger could result in Cleveland Cliffs having to divest itself of various parts of the business in order to satisfy the concerns of the U.S. Justice Department. The CEO of US Steel mentioned that antitrust concerns as one of the reasons why they rejected the initial offer from Cleveland Cliffs.

https://www.nwitimes.com/news/local/cle ... 92027.html

[Guest]

That said, I think USS made a big mistake not accepting the offer. Its investors may profit in awaiting another bidder, but the private equity vultures, flush with cash, are already hovering above, ready to offer a deal too good to refuse that will almost certainly lead to selling off the best parts of USS, probably to foreign conglomerates, and shutter the rest, further shrinking the American steel industry.

That would be a very bad development if private equity vultures were to buy US Steel. They would most likely shutter the blast furnaces and BOFS at Gary and Edgar Thompson, downsize Granite City plant, and keep Big River Steel and it's EAFS. Big River Steel would be the "crown jewel" for any buyer.

Apparently US Steel has proposed a new offer with ArcelorMittal. The unions at US Steel want Cleveland Cliffs to buy the company and will not talk to any other potential buyer. And analysts at Morgan Stanley find ArcelorMittal's bid rather odd, with its strategy of reducing their carbon footprint.

https://www.msn.com/en-ca/money/topstor ... r-AA1fmGxd

[William Lafferty]

Wasn't Cliffs a subsidiary of US Steel at one point? I thought 90% of the domestic steel industry owned by US steel until 1911ish?

United States Steel was formed in 1901 as a vertically integrated Goliath by the merger of three of the nation's largest steel producers, Carnegie, National, and Federal. Samuel Mather founded the Cleveland Iron Mining Company that merged with the Cliffs Iron Company in 1890. Mather's son would be a founder of Pickands, Mather. Marcus Hanna and the Rhodes family had nothing to do with Cleveland Cliffs and were, indeed, keen competitors. Cleveland Cliffs, like Pickands, Mather, was primarily a miner and supplier of iron ore to the steel industry, almost exclusively after 1901 that portion independent of USS, and never had a direct relation with USS. The participation of Cleveland Cliffs in steel making is a relatively new development. That said, I think USS made a big mistake not accepting the offer. Its investors may profit in awaiting another bidder, but the private equity vultures, flush with cash, are already hovering above, ready to offer a deal too good to refuse that will almost certainly lead to selling off the best parts of USS, probably to foreign conglomerates, and shutter the rest, further shrinking the American steel industry.

[Guest]

I thought the Mathers and Hanna families started and owned Cleveland Cliffs.

Anyway - surprised with interest rates so high that now would be the time to take over a company. Cliffs is using less cash than the other bid.

[Jared]

Wasn't Cliffs a subsidiary of US Steel at one point? I thought 90% of the domestic steel industry owned by US steel until 1911ish?

As I recall Lackawana was one of the few independent steel manufacturers in the 1910s and 20s.

[Guest]

Why do these people think US Steel is worth so much money??

[Mr Link]

And the bidding has begun. A private company Esmark offered half a billion more, and more potential purchasers are apparently in discussions as well:

https://www.reuters.com/markets/commodi ... 023-08-14/

[Guest]

Holy smokes.

U.S. Steel rejects a $7.3 billion offer from rival Cleveland-Cliffs; considers alternatives. https://www.cnbc.com/2023/08/13/us-stee ... mpany.html

Excerpt - " Goncalves said the company’s offer has the support of the United Steelworkers union, which has 14,000 members at Cleveland-Cliffs and 11,000 at U.S. Steel. In a letter of support posted to the company’s website, the union said the company was “in the best position to ensure that U.S. based manufacturing remains strong in this country” and praised the company for not cutting union jobs when it acquired AK Steel in 2019 and ArcelorMittal in 2020.