Cleveland-Cliffs Responds to Lawsuits Over Blocked U.S. Steel Acquisition by Nippon Steel
Cleveland-Cliffs Rejects Baseless Lawsuits
Cleveland-Cliffs Inc. (NYSE: CLF) has issued a robust statement responding to recent lawsuits filed by U.S. Steel and Nippon Steel, following the U.S. government's intervention to block Nippon Steel's proposed $14.9 billion acquisition of U.S. Steel. The lawsuits, which name Cleveland-Cliffs, the United Steelworkers, and the U.S. government as defendants, have been described by Cleveland-Cliffs as an unfounded attempt to shift blame for the failure of the acquisition onto other parties.
Lourenco Goncalves, Chairman, President, and CEO of Cleveland-Cliffs, strongly rejected the lawsuits, characterizing them as a desperate and shameless effort by U.S. Steel and Nippon Steel to scapegoat others for their poor strategic decisions. He pointed out that U.S. Steel executives failed to secure personal payouts from the failed acquisition, and now, frustrated with the loss, are attempting to distract from their own mismanagement. Goncalves argued that the ongoing legal actions are a futile attempt to cover up their self-inflicted disaster.
Bipartisan Opposition to the Acquisition
The proposed acquisition was immediately met with bipartisan opposition due to national security concerns. Cleveland-Cliffs emphasized that the decision to block the sale was not only supported by political figures from both sides of the aisle, but also by industry leaders and experts. U.S. Senators J.D. Vance, Marco Rubio, and Josh Hawley were among those who urged the Committee on Foreign Investment in the United States to intervene and block the sale, stating that such a deal would undermine U.S. trade protections and could ultimately harm domestic steel production and job creation. Vance, Rubio, and Hawley expressed concerns about the long-term implications of foreign ownership of critical American industries like steelmaking, and their stance culminated in a letter sent to President Biden in May 2024, urging decisive action.
U.S. Government Blocks Deal After Year-Long Review
The U.S. government's decision, made after a year-long national security review, was seen as a victory for those advocating for maintaining American control over vital infrastructure. The acquisition was particularly controversial because of Nippon Steel's long history of overcapacity in steel production and its involvement in harmful trade practices such as steel dumping. Cleveland-Cliffs emphasized that Nippon Steel's practices had caused significant harm to the U.S. steel industry, leading to job losses and the deterioration of domestic production capabilities.
Criticism of U.S. Steel’s Strategy
Goncalves also criticized U.S. Steel for rejecting an all-American solution, which could have avoided foreign ownership and instead focused on strengthening U.S.-based steel production. U.S. Steel’s insistence on pursuing the deal with Nippon Steel was described as a misguided choice, particularly given Nippon Steel's history of evading U.S. trade laws. According to Cleveland-Cliffs, U.S. Steel’s leadership, including CEO David Burritt, should have accepted responsibility for the failed deal instead of engaging in a baseless legal battle.
Burritt’s Stock Sale Highlights Lack of Confidence
Furthermore, Cleveland-Cliffs pointed out that even U.S. Steel's CEO, David Burritt, recognized the risks of the acquisition by selling a portion of his personal stock in the company at $50.01 per share on December 18, 2023, the day before the deal was blocked. This move, Cleveland-Cliffs argues, highlights the lack of confidence in the proposed transaction and signals the poor judgment of U.S. Steel’s executives.
Prepared for Litigation
Cleveland-Cliffs, which is a leading North American producer of value-added steel products, maintains that it is well-prepared to litigate and looks forward to exposing the facts in court. The company has also taken the opportunity to reaffirm its commitment to maintaining and expanding U.S.-based production capabilities while ensuring national security in critical sectors such as steelmaking.
About Cleveland-Cliffs Inc.
Headquartered in Cleveland, Ohio, Cleveland-Cliffs operates a vertically integrated steel business, from iron ore mining and pellet production to steelmaking and downstream processing. The company is a key player in the automotive industry, providing steel products for manufacturing vehicles. Cleveland-Cliffs employs approximately 30,000 people across its U.S. and Canadian operations.
A Strong Defense of National Interests
As the lawsuits continue, Cleveland-Cliffs remains firm in its position that the decision to block the acquisition was made in the best interest of national security and the long-term health of the U.S. steel industry.
