Cleveland Cliffs Inc (CLF)

[winchem21]

This was unexpected, but it is now clear why and how. Nippon pays less than 1% interest on its long-term bonds and can easily afford to issue 100% debt to overpay for US Steel as they are doing. They have owned Mid Rex (headquarter in Charlotte) for many years and have a lock on global reduced iron pellet manufacturing. The strong alliance between Nippon and the US Japanese automotive plants will become evident. Many of the blast furnace process changes implemented by CLF have been made possible by the pilot plant studies done by Nippon.

There is not a level playing field in terms of availability to low cost capital. Nippon could not afford to do this at this high price if it were a US company.

Meanwhile the US is financing or taking care of most of Japan’s defense security needs and going further in debt as a nation to do this. This deal could easily blow up for good reasons.

Either way, CLF benefits from this entire process which LG initiated. The American workers and union members will likely not benefit from this merger.