Cleveland-Cliffs announced an “aggressive” share-buyback program just months after making an ultimately unsuccessful takeover bid for rival United States Steel Corp. Cliffs shares jumped as much as 12%.
Cliffs Chief Executive Officer Lourenco Goncalves said Nippon Steel Corp.’s $14.1 billion deal to buy US Steel validated his view that the steel sector remains undervalued.
“Given that our CLF shares are still significantly undervalued, we will now re-focus our capital allocation priorities towards more aggressive share buybacks under our existing share repurchase authorization,” Goncalves said in a statement Monday. “We congratulate US Steel on their announcement and wish them luck in closing the transaction with Nippon Steel.”
The statement signals Cliffs has no plans to submit a counterbid. The United Steelworkers, who exclusively supported Cliffs’ bid, have a transferable right to make a counterbid as part of its collective bargaining agreement. The union said repeatedly it would transfer that right to Cliffs if US Steel chose another company.
Cliffs rose 12% to $20.92 at 11: 34 a.m. in New York, brining the year-to-date gain to 30%.