Who Is the Mogul Bidding for U.S. Steel
James Bouchard grew up around steel and deal making. ‘We have the cash,’ he says of his $7.8 billion surprise bid.
James Bouchard’s career was built on steel and deals. He grew up outside of Chicago where his parents worked for a steel company, and his neighbor was a serial deal maker.
After amassing his own fortune through acquiring companies in the steel business and other industries, the 62-year-old investor has made a bold offer to buy United States Steel for about $7.8 billion.
“We have the cash,” he said. Bouchard said he has $10 billion set aside for the acquisition. He said the industrial conglomerate he leads, Esmark, is debt free and that he doesn’t intend to borrow money against it to buy U.S. Steel X 0.91%increase; green up pointing triangle.
Striking a deal for U.S. Steel, one of the four major producers of domestic steel, would vault Bouchard into the upper echelons of American manufacturing—alongside past capitalist titans J.P. Morgan and Andrew Carnegie, who established U.S. Steel in 1901. Since then, the company has supplied steel for cars, skyscrapers, railroads and factories during the country’s rapid industrialization during the 20th century.
U.S. Steel has struggled lately to keep up with some industry upstarts that have bigger profits, thanks to newer mills and more efficient operations. Mr. Bouchard said U.S. Steel’s turnaround should start with better customer service.
“If U.S. Steel wants to compete, we have to deliver a product in 24 hours,” he said.
U.S. Steel declined to comment on Bouchard’s claims about the company’s delivery performance.
Bouchard jumped into the competition to acquire the company Monday by offering to pay $35 in cash for every U.S. Steel share. The all-cash offer countered a cash-and-stock proposal revealed over the weekend by rival steel company Cleveland-Cliffs that it said is worth about $35 a share. U.S. Steel’s share price has shot up 36% over the past week.
Prior to those companies announcing their bids, U.S. Steel said it had received multiple offers for all or parts of the 122-year-old company. Its board has started a wide-ranging look at the strategic options.
“Jim, in particular, is a guy who can read the cards on the table and play accordingly,” said James V. Koch, a former Esmark board member and past president of Old Dominion University in Virginia.
Bouchard, the fifth of seven children in his family, was raised in a suburb west of Chicago. His parents both worked at Chicago-based Inland Steel. His mother wrote letters to Inland employees in the military during World War II. His father worked in sales and would later become a regional sales executive for the company.
The family’s neighbor was hard-charging entrepreneur Donald Kelly, one of the pioneers of leveraged buyouts starting in the 1970s. Bouchard said he grew up with Kelly’s children, who now are investors in Esmark. Kelly did business under the Esmark name and later sold the name to Bouchard for $125,000 for his own business ventures; Kelly invested $500,000 in the fledgling company.
“His advice to me: Don’t do anything with debt. And that was from the king of leveraged buyouts,” Bouchard said.
As CEO of Esmark, Bouchard has built a diverse portfolio of companies in real estate management, machinery, corporate jet leasing and energy drilling.
“I‘ve been extremely lucky,” he said. “All of my assets make money.”
His primary interest, though, is steel, where Esmark’s businesses are in distribution and coating sheet steel with tin for cans. He said he’s grown more interested in acquiring U.S. Steel as he’s watched the company struggle with operating its plants efficiently.
“I’m a steel guy,” said Bouchard.
His first jobs in the steel industry were in customer service at steel distributors in Chicago and at Inland Steel. He joined U.S. Steel in the late 1980s as a sales representative and advanced through a series of sales management positions.
He was promoted to a vice president for U.S. Steel’s European business, which is anchored by a mill in Slovakia that the company acquired in 2000. Bouchard was among a group of executives tapped to help undo the mill’s Soviet-style management and create sales and customer service capabilities to compete in the European steel market.
“After we turned the business around, I sat down and I said: ‘I can do this myself,’” he said.
He left U.S. Steel in 2003 after 15 years, with a goal of running his own steel businesses. He started acquiring independent steel distributors and processors.
Bouchard said owning his own businesses reinforced the importance of customer service, particularly delivering steel on time. Running mills efficiently and filling orders quickly, he said, has helped newer steelmakers, such as Nucor and Steel Dynamics, rapidly rise to the top of the industry.
Nucor and Steel Dynamics make their steel by melting scrap in electric arc furnaces, allowing them to produce steel faster, and at a lower cost than U.S. Steel and Cleveland-Cliffs, which melt iron ore in coal and gas-fueled blast furnaces. U.S. Steel acquired the Big River Steel mill in Arkansas in 2021 to gain a lower-cost operation with new equipment.
“They deliver on time,” Bouchard said. “Steel Dynamics and Nucor have kicked everybody’s ass.”
Bouchard sprang into action when Cleveland-Cliffs put in its offer for the company. He said the business overlap between Pittsburgh-based U.S. Steel and Cleveland-Cliffs, along with Cleveland-Cliffs’ need to pay down debt, would likely force the breakup of U.S. Steel. Individual steel mills and other assets would be sold, he said.
Cleveland-Cliffs has said its acquisition plan would receive regulatory approval and has strong support from the United Steelworkers union.
Bouchard said he won’t carve up the company. “The only reason I’m in the game is I’ll keep the company together and in Pittsburgh,” he said.
Bouchard faces long odds of succeeding. Other companies with deeper pockets could jump into the competition with higher offers than Mr. Bouchard’s. It is also unclear whether the U.S. Steel board will accept any of the offers.
Bouchard has jumped into long-shot deals before. In 2006, Esmark waged and won a proxy fight to gain control of Wheeling-Pittsburgh Steel in West Virginia.
Bouchard became its chief executive officer, but found Wheeling-Pittsburgh’s plants and equipment were in worse shape than he expected. He sold the company in 2008 to Russian steelmaker Severstal for $1.25 billion. It was sold again and most of its shops wound up permanently closed.
The quick flip of Wheeling-Pittsburgh and its subsequent demise led some steel industry executives to view Bouchard as more an opportunist than a corporate steward.
Bouchard quickly rebuilt Esmark’s steel business. He bought back the steel distributors and other businesses that had ended up in the Severstal purchase. He later picked up Wheeling-Pittsburgh’s tin-coating shop when its assets went up for auction. Esmark’s Ohio Coatings now supplies tin-coated sheet steel used to can food.