JPMorgan suspends ratings on US Steel, Cleveland-Cliffs (update)

Update 3:50pm: Adds comment from Cleveland-Cliffs CEO on bid and JPMorgan.

JPMorgan suspended its ratings on US Steel (NYSE:X) and Cleveland-Cliffs (NYSE:CLF) on Thursday.

"Due to J.P. Morgan Securities LLC and/or its affiliates acting as Financial Advisor to Cleveland-Cliffs in relation to the proposed acquisition of United States Steel Corporation, we are suspending our ratings, price targets, and estimates for United States Steel Corp and Cleveland Cliffs," according to a JPMorgan note from analyst Bill Peterson.

The rating suspension comes after it was revealed in a filing last Wednesday that US Steel (X) received a $54 a cash and stock bid from Cleveland-Cliffs (CLF) before it agreed to a $55 a share all cash deal with Nippon Steel (OTCPK:NISTF) last month.

Cleveland-Cliffs CEO Lourenco Goncalves told Bloomberg in an interview on Thursday that the steelmaker's offer for US Steel (X) is off the table. US Steel (X) fell 1.3% on Thursday, at least partly after the comment, paring brief gains it made following the JPMorgan rating suspension.

“That transaction is no longer available, it’s no longer a backstop for their failure,” he said in a Thursday interview with Bloomberg. “If they can’t close — I don’t know where they are at this point — that offer is gone, that offer no longer exists.”

Goncalves explained that JPMorgan has been one of the banks it used for US Steel (X) bid, and he doesn't know why the bank decided to suspend its coverage.

“You need to ask JPMorgan,” he said. “JPMorgan has been one of our banks in the transaction, but the transaction is now gone.”

Cliff's Goncalves on Tuesday said that he's adamant that US Steel's (X) planned sale to Nippon Steel (OTCPK:NISTF) won't be completed.

"I firmly believe that that deal will not close," Goncalves said earlier Tuesday in an interview with CNBC. "I can't believe that the most union-friendly president that the United States has ever had will allow for the slap in the face to the USW… by giving the deal to a lower offer, coming from a foreigner that has a horrible history of breaking trade commitments in the United States."

On Wednesday, US Steel (X) dropped 2.4% after a report that former President Donald Trump said he would block the company's sale to Nippon Steel (OTCPK:NISTF) if he were president.

“I would block it instantaneously. Absolutely,” Trump told reporters, according to Bloomberg.

US Steel (X) is set to report Q4 results after the market close on Thursday.