– Sectors – Cleveland Cliffs (CLF)

August 14, 2023

US Steel Rejects Cleveland Cliffs’ Takeover Offer After the Latter Refuses to Engage in the Necessary/Customary Processes to Assess Valuation & Regulatory Issues – GLJ’s Take

By Gordon L. Johnson II

Cliff’s Offers to Pay a 42% Premium for US Steel, Effectively Crediting the Company for its “Best for All®” Strategy Before it’s Been Fully Executed (a huge plus for US Steel’s shareholders). Last night, we…

Cleveland Cliffs (CLF)

US Steel Rejects Cleveland Cliffs’ Takeover Offer After the Latter Refuses to Engage in the Necessary/Customary Processes to Assess Valuation & Regulatory Issues – GLJ’s Take

Overly Bullish Consensus Ests. + an Implied EV-EBITDA Multiple >2x US Steel’s = Downgrade to SELL

The Commodity Bull Has Just Begun & CLF is (very) Well Positioned to “Flex” its Muscle; PT to $36.06

Using a Mid-Cycle Multiple, Even at Just 80% of the Curve, We See 22-30% Upside as Fated; BUY

We See CLF as Tactical Buy on Coming Fiscal Stimulus + Infrastructure Push ; Upgrade to Trading BUY

Strong 4Q Pre-Announce and Early ’21 Momentum, but Emerging Headwinds Force Us Down to a HOLD Rating

The “Yellen Put” Is Back and, with It, Are Chances for a Rotation Into Value; Upgrading CLF to BUY

With Tail Risk to the Upside, We Upgrade Our Rating to Hold and Temporarily Move to the Sidelines

Downgrade to SELL After CLF’s Outlook Conflicts with the Data & Its Future Growth Is Pinned to Hope

Playing Poker Against Someone w- a Chip-Making Machine (Fed) = Lose-Lose Situation; Upgrade to HOLD

It Appears Cliffs Burnt $546mn in Just 3 Months in a “Good” Market; So What Happens in “Bad” Market?

Beware the “Ides of March”, or in this Case 2-20-20 (i.e., CLF’s Earnings Date)

Does CLF Have a China Dumping Problem & Will ArcelorMittal’s Indiana Harbor Idlings Hurt 2020 Guide?

Is Diluting Your Equity Holders to Purchase a Struggling Channel Partner a Real-Solid Strategy?

Expected Tumble in Commodity Prices + “Clouds” Around Demand for CLF’s New HBI Plant = SELL