US Steel now all about striking while iron is hot
NEW YORK, Jan 27 (Reuters Breakingviews) - The long United States Steel (X.N), opens new tab saga has suddenly become a matter of urgency. Boss David Burritt is fighting to salvage a $15 billion sale to Nippon Steel (5401.T), opens new tab. Rival bidder Cleveland-Cliffs (CLF.N), opens new tab wants another shot at a takeover. And days ahead of a deadline, a hedge fund has maneuvered, opens new tab to oust the CEO and replace most of the board. The company's stubbornly resilient stock makes time of the essence.
Burritt is in a tough spot. His decision to invest heavily to move from union-staffed blast furnaces to less labor-intensive electric arc furnaces tanked the bottom line. It also emboldened Lourenco Goncalves, the pugilistic Cleveland-Cliffs boss, to pursue an unsolicited $7 billion takeover bid in August 2023, which then attracted the Japanese buyer.
U.S. Steel's results have worsened, and President Joe Biden's administration blocked the Nippon transaction on national security grounds. Ancora is blasting the company for getting itself into this situation, saying it wants to reorient a strategy that has tripled capital expenditures over three years and instead collect a $565 million breakup fee to reinvest in old plants.
A turnaround would be welcome. The outlook for 2025 EBITDA keeps falling, according to estimates gathered by Visible Alpha. And yet its shares have climbed 21% since it sued the government to overturn the Nippon decision. At around $37, they're short of Nippon's $55 offer, but well above where they traded before the takeover clash began. Cleveland-Cliffs and bid partner Nucor (NUE.N), opens new tab are only preparing to offer in the 'high $30s' per share, CNBC reported, opens new tab.
The situation makes it important to get past Nippon soon. Ancora was pressed into action by the Thursday cutoff to nominate directors. Although it says it does not want U.S. Steel to solicit another deal, some facts can be construed differently. The hedge fund's choice for CEO, Alan Kestenbaum, sold steelmaker Stelco to Cleveland-Cliffs last year. One of its board candidates sold Goncalves another company while another served as a Cleveland-Cliffs director.
There's also potential upside to be grabbed. If Cleveland-Cliffs offers stock for U.S. Steel, it can share estimated annual synergies worth nearly $4 billion once taxed and capitalized. Ancora also owns just a tiny stake, leaving it scope to lower its cost basis if U.S. Steel's stock price dips.
Kestenbaum is a proven operator, and links to Cleveland-Cliffs in a consolidating industry are hard to avoid. Moreover, the longer the situation lingers, the less promising U.S. Steel threatens to be. As any blacksmith or steelmaker knows, it's best to strike while the iron is hot.
Follow @JMAGuilford, opens new tab on X
CONTEXT NEWS
Hedge fund Ancora said on Jan. 27 that it has taken a stake in United States Steel, is urging the company to terminate its agreed sale to Japanese rival Nippon Steel, wants to replace CEO David Burritt and has nominated a slate of nine candidates to replace most of the board.
The Biden administration blocked the Nippon deal on national security grounds.
Ancora wants to install Alan Kestenbaum as U.S. Steel's CEO. Bedrock Industries, the investment firm he chaired, acquired Canadian steelmaker Stelco, formerly a unit of U.S. Steel, in 2016 after it sought protection from creditors. Bedrock took it public a year later, and Cleveland-Cliffs bought it in 2024.
Cleveland-Cliffs offered to buy U.S. Steel in August 2023, and CEO Lourenco Goncalves said on Jan. 13 that a combination of the two companies was inevitable.
For more insights like these, click here, opens new tab to try Breakingviews for free.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Scottish Sun
13 hours ago
- Scottish Sun
Four red flags for buyers to avoid a moneypit home – or face forking out £25k in repairs
Read below for the best tips to get on the housing ladder GOOD FOUNDATIONS Four red flags for buyers to avoid a moneypit home – or face forking out £25k in repairs Click to share on X/Twitter (Opens in new window) Click to share on Facebook (Opens in new window) HOUSE hunters who fail to notice a handful of red flags on a property could end up forking out nearly £26,000 in repairs. Trying to get on the property ladder is already costly enough, with buyers expected to save for a deposit, pay stamp duty charges and solicitors fees. 1 Jeremy Leaf shares tips for buying a home But prospective owners who fail to spot issues like mould, or faulty plumbing could end up forking out more in repairs. The Sun spoke to Jeremy Leaf, north London estate agent, who said buyers should go into property viewing with their "eyes open". "When you're buying a house, it's a big commitment and you're going to get some nasty surprises," he shares. The expert has shared the four biggest red flags buyers should look out for to avoid paying up to £25,700 in repairs. Japanese knotweed - up to £20,000 When viewing a property, Jeremy said wannabe homeowners should keep their eyes peeled for Japanese knotweed. This plant grows quickly and can cause damage to buildings, plus it's extremely difficult to eradicate. Japanese knotweed, which was introduced to the UK as an ornamental plant in the nineteenth century, can only be removed with costly specialist treatment. Our home is so mouldy mushrooms and flies infest walls - it's making us sick The plant can be identified from its distinct features, such as large, heart-shaped leaves, hollow bamboo-like stems that have a zig-zag growth pattern. So if you suspect the plant may be present in the home you should ask the seller or estate agent. That's because the issue could cost up to £20,000 to fix depending on the severity of the issue. Alex Peters, author of Checkatrade cost guides, said: "There are numerous ways to remove Japanese knotweed with average removal costs at £1,750 but this can range from £950 - £20,000 depending on the scale of the problem. "Methods include domestic herbicide treatment, full excavation & removal, sifting and screening and on-site relocation." Asbestos - up to £3,750 Abestos was commonly used to insulate homes, but was banned in the UK 26 years ago because it was discovered to be a health hazard. It can be identified by its fluffy texture when found in buildings. Jeremy said that sellers can try and obscure it and make it difficult for a buyer to find. In some instances, the property expert said that people looking to shift their home have parked old cars in front of walls in the garage to cover up the substance. "People can go to great lengths to obscure defects and properties, if they want to," he said. To have asbestos removed, you will need a qualified surveyor to carry out an inspection, Alex from Checkatrade. "This costs in the region of £200-£1,000 and they will identify the type of asbestos in your home and any associated risks." He added: "Average removal costs can range from £950 - £3,750." Electrical and plumbing deficiencies Buying a house with electric and plumbing deficiencies could end up costing you up to £750. Jeremy said house hunters should closely examine plugs and switches in the home they are considering buying to see if they work correctly. It may also be worth running taps and the shower to see if everything is working as it should be. Alex said the best way to check out any problems is with an electrical safety check. This is a sort of MOT for the electric systems in your home. He said: "The average cost of an electrical safety check roughly starts at £100 - £250. "It is wise to have an electrical safety check every 5-10 years and this should always be completed by a qualified electrician." Alex said that if you require extra work to be conducted by an electrician such as adding new wiring or mending broken electrical equipment, electricians could charge £55 per hour or £400 per day. Meanwhile, the cost to repair a burst or leaking pipe could cost up to between £50 to £350 per day. Mould - £1,200 Fixing mould in your new property could end up costing you £1,200. So it may be worth keeping your eyes peeled for the substance to avoid forking out for repairs once you move in. Alex said buyers should "always be on the lookout for mould" as it loves to appear in hidden areas. The fungus is often found in areas that are damp, dark, and not easily visible. These spots can include behind furniture, in loft spaces, beneath carpets or floors, behind curtains, and inside toilet tanks. It is also worth checking out windows and cupboards where condensation and moisture builds quickly. You can also ask the seller or estate agent if the property has experienced issues with mould in the past and if they have been resolved. Alex said issues caused by mould are "numerous" and it is always "better to remove the problem as soon as possible to stop it from spreading and causing damage".
NBC News
a day ago
- NBC News
Trump says national security concerns in Nippon-U.S. Steel deal can be resolved
U.S. President Donald Trump said on Friday that concerns over national security risks posed by Nippon Steel's $14.9 billion bid for U.S. Steel can be resolved if the companies fulfill certain conditions that his administration has laid out, paving the way for the deal's approval. Shares of U.S. Steel rose 3.5% on the news in after-the-bell trading as investors bet the deal was close to done. Trump, in an executive order, said conditions for resolving the national security concerns would be laid out in an agreement, without providing details. 'I additionally find that the threatened impairment to the national security of the United States arising as a result of the Proposed Transaction can be adequately mitigated if the conditions set forth in section 3 of this order are met,' Trump said in the order, which was released by the White House. The companies thanked Trump in a news release, saying the agreement includes $11 billion in new investments to be made by 2028 and governance commitments including a golden share to be issued to the U.S. government. They did not detail how much control the golden share would give the U.S. Shares of U.S. Steel had dipped earlier on Friday after a Nippon Steel executive told the Japanese Nikkei newspaper that its planned takeover of U.S. Steel required 'a degree of management freedom' to go ahead after Trump earlier had said the U.S. would be in control with a golden share. The bid, first announced by Nippon Steel in December 2023, has faced opposition from the start. Both Democratic former President Joe Biden and Trump, a Republican, asserted last year that U.S. Steel should remain U.S.-owned, as they sought to woo voters ahead of the presidential election in Pennsylvania, where the company is headquartered. Biden in January, shortly before leaving office, blocked the deal on national security grounds, prompting lawsuits by the companies, which argued the national security review they received was biased. The Biden White House disputed the charge. The steel companies saw a new opportunity in the Trump administration, which began on January 20 and opened a fresh 45-day national security review into the proposed merger in April. But Trump's public comments, ranging from welcoming a simple 'investment' in U.S. Steel by the Japanese firm to floating a minority stake for Nippon Steel, spurred confusion. At a rally in Pennsylvania on May 30, Trump lauded an agreement between the companies and said Nippon Steel would make a 'great partner' for U.S. Steel. But he later told reporters the deal still lacked his final approval, leaving unresolved whether he would allow Nippon Steel to take ownership. Nippon Steel and the Trump administration asked a U.S. appeals court on June 5 for an eight-day extension of a pause in litigation to give them more time to reach a deal for the Japanese firm. The pause expires Friday, but could be extended.
Scottish Sun
2 days ago
- Scottish Sun
‘Nowhere near enough' – Top horse owner rejects £2.2MILLION offer for superstar syndicate filly Shes Perfect
Click to share on X/Twitter (Opens in new window) Click to share on Facebook (Opens in new window) A TOP horse owner said he was 'delighted' to miss out on £2.2million - claiming the offer for his superstar filly was 'nowhere near enough'. Members of the Basher Watts Racing 2 syndicate voted overwhelmingly in favour of rejecting the life-changing sum for Shes Perfect. 1 Basher Watts, third from left, was briefly a Classic-winning owner with his syndicate and filly Shes Perfect - until they were demoted to second Credit: Shutterstock Editorial The Charlie Fellowes-trained three-year-old was first past the post in the French 1,000 Guineas under Kieran Shoemark last month. But, amid boos and cries of 'cheat' in the winner's enclosure, she was demoted and placed second behind Zarigana, with connections also losing their appeal against the decision of French stewards. Shes Perfect returns to action at Chantilly on Sunday in the Group 1 Prix de Diane Longines, where victory is worth 'just' £472,231. The horse was bought for around £42,000 in May last year - meaning, if they had sold to Japanese buyers, the syndicate would have made a 5,138 per cent profit on their investment. It equated, Basher said, to around £20,000 each. But, while much more than they stand to make at the races with her, Basher said the sum was 'nowhere near enough', and added: "Some things are worth more than money." Explaining the deal, the syndicate boss said: "So, what actually happened? "We had a Japanese client approach Charlie and offer £2.2m. "How it works is people own a share of the horse and are entitled to a percentage of the sale which, in this case, after fees, if you own one per cent you would have got about £20,000. "So I put it to the group and 37 out of 38 voted no. "I'm delighted everyone voted no. "For me, I had a dream of getting lucky and owning a Classic, Group 1 runner - a horse who will take you to all the big racecourses… which is what she did. "She might not earn £2.2m in prize money but, we had her valued and, if she never raced again, she'd be worth up to £1m. "So, you're trading the rest of her career for £1m. "That to all of us, and me, is just not worth it. "Those 15 minutes we experienced at Longchamp where we were Classic-winning owners, I would not trade that for any amount of money. "Horse racing is my passion, my love, and this is my dream to be in the poisition we are in. "Some things mean so much more than money and this is one of those moments. We are absolutely living our dream. "If she gets beat on Sunday who cares? As long as she is fit and well we're going to have many fantastic days out with her. "The time to sell will be down to the syndicate only - and at the moment she's not for sale. "Imagine her winning in someone else's silks - I dont know how I'd process that. She's our baby, our dream. "And it's not worth trading in the dream for that amount of money." FREE BETS - GET THE BEST SIGN UP DEALS AND RACING OFFERS Commercial content notice: Taking one of the offers featured in this article may result in a payment to The Sun. You should be aware brands pay fees to appear in the highest placements on the page. 18+. T&Cs apply. Remember to gamble responsibly A responsible gambler is someone who: Establishes time and monetary limits before playing Only gambles with money they can afford to lose Never chases their losses Doesn't gamble if they're upset, angry or depressed Gamcare – Gamble Aware – Find our detailed guide on responsible gambling practices here.
