Speaking recently, Lourenco Goncalves (CEO of steelmaker Cleveland-Cliffs) labeled Japanese Nippon Steel’s ongoing acquisition of U.S. Steel a “fiasco.” Nippon (the world’s fourth-largest steel producer) paid handsomely for the smaller firm (the 27th-largest) — $14.9 billion. In doing so, Nippon outbid Goncalves’ Cleveland-Cliffs by 25 percent ($55 per share to $40). Anticipating significant profit potential, the Japanese company plans to modernize the U.S. Steel’s outdated facilities and tighten up its operations. Moreover, Nippon pledged to retain U.S. Steel’s current workforce, to honor its union contracts, and to keep its iconic company name. What should have been a simple acquisition by a large, well-run firm taking over a smaller, floundering one ended up being needlessly complicated.
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