You happen to be on an Insider Preview build?
If Steam is truly in Offline mode, you would not get the error message about it being unable to initialize a connection.
However, if you are running an obsolete OS that is no longer supported or one that behaves abnormally because it is still in development, Steam will have problems like this.
Since you have now excluded the game, validate the files three or four times. Once never fixes everything, and the second pass isn't much better.
Edit: Also note that today is Steam Maintenance day. It could be possible that the Steam authentication servers in your area are just offline.