Deal...and No Deal, Markets' 7-Week Win Streak, Costco CEO Exclusive 12/18/23

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David Faber (0:31)

Market Moving Insight and Analysis join Jim Cramer, David Faber and me, Carl Quintanilla, on the opening bell hour of CNBC Squawk on the Street.

Good Monday morning, welcome to Squawk on the Street. I'm David Faber with Jim Cramer. We're live from Postline with the New York Stock Exchange. Carl has this morning off. Let's give you a look at futures as we get ready to start another week of trading right here at the New York Stock Exchange. And you can see we are set up for what appears to be a higher open. Our roadmap this morning, though, begins with the question, to merge or to unmerge, demerge?

Japan's Nippon Steel is buying US Steel, but Adobe scrapping its Figma deal, not to mention Grail. Oh man, we'll get to that as well. And as for the market, seven weeks and counting, futures are pointing to more gains at the open. You just saw that. And it's holiday crunch time. We're gonna gauge the state of the consumer and the impact of inflation. We're gonna be speaking to the CEO of Costco.

That'll be, that's a special treat. That'll be this hour.

Let's start though with M&A and including that US. Steel, Nippon Steel deal. It's of course a transaction. Our viewers know that I've been following here, but must say, Jim, that Nippon was not a name that I had mentioned at least. It was one that I had rarely heard and oftentimes just sort of in the abstract.

They somewhat surprised here, got involved though, like many other companies. And as of course, we had been informing our viewers for quite some time. This was a robust auction throughout, as I had reported, I think it was last week. Brids were certainly well into the 40s, but $55 a share, all cash. It even gets up to an actual number of $14 billion in equity value that's pretty impressive. We've talked for years about how US. Steel was really a tiny little company. Not so much when it sells, and you have to give the board and management their due here. Cleveland Cliffs came. They said, no, thank you. We're not interested in that number. We're going to try to maximize shareholder value and maximize, they did, didn't they?

Jim Cramer (2:38)

Well, I've got to tell you, they sure did. I got to hand to them because Nippon is number one in Japan, number four worldwide, but really is not a real player here.

So I think that what a banker might have just said is, look, given the fact that our antitrust organizations are both very, very tough, let's find someone who has very little overlap. Well, when I look at the overlap here, David, it's about as low as you can get.

David Faber (3:03)

It's a great point, Jim. Domestically, the overlap is very small. We had made the point many times that Cleveland Cliffs, again, steel is a global market, but there could be arguments given tariffs and the like that you do need to look at the domestic makers and what they offer to, for example, the automakers. The combination there of Cleveland Cliffs, for example, and US Steel would at least have raised some real questions. This doesn't do that. By the way, I do have some questions, which is there's no real cost synergies here either. So they're paying 55 with no cost synergies. They're talking about technology improvements and the things of that nature.

They're talking about what they're gonna be able to do when it comes to producing a lot less carbon that goes along with producing steel, Jim.

Jim Cramer (3:45)

I'm really interested in making that case.

David Faber (3:46)

But off the bat, it's paying 55 cash without a clear line of sight to huge synergies.

Jim Cramer (3:52)

Well, what do you do if your compensation by export destination, this is from the most recent piece about them, is only 4% North America?

So if you're looking at the biggest market in the world and you're saying to yourself, how do we get in?

Can we start? Can we build? No, the answer is we can just buy. Now, David, 232, remember the defense ruling that we had under President Trump, was pretty smart on Japan. But then they made an announcement of actions on Japanese imports of steel, February 7th, 2022, which let them come in a little bit, but they still weren't really able to do what a big steel company would like to do. So David, this is kind of monumental. And what it does say is that if I'm in Cleveland Cliffs, I wish this not happened, because these guys have a good balance sheet.