Nippon Steel Defends US Deal After Biden Comes Out Against Bid
Japan’s Nippon Steel Corp. defended its proposed $14.1 billion acquisition of United States Steel Corp. after President Joe Biden earlier in the day said the company should retain American ownership.
(Bloomberg) -- Japan’s Nippon Steel Corp. defended its proposed $14.1 billion acquisition of United States Steel Corp. after President Joe Biden earlier in the day said the company should retain American ownership.
“Our transaction delivers clear benefits to US Steel, union workers, the broader American steel industry, and American national security,” Nippon Steel said in an emailed statement. “Through increased financial investment and the contribution of our advanced technologies to US Steel, Nippon Steel will advance American priorities by driving greater quality and competitiveness for customers in the critical industries that rely on American steel while strengthening American supply chains and economic defenses against China.”
The statement came late in the day after Biden on Thursday said the iconic Pennsylvania company should retain American ownership. Biden’s move against a takeover by the Japanese company came despite the risk of upsetting a key ally.
Earlier on Thursday, Cleveland-Cliffs Inc. Chief Executive Officer Lourenco Goncalves said he’d consider another bid — with union support — for US Steel, albeit at a significantly lower price than the existing offer from Nippon. US Steel rejected an earlier bid from Cleveland-Cliffs.
“No other US steel company on its own can meet this challenge while also meeting antitrust requirements,” Nippon said in its statement.
A share plunge for US Steel shows that investors are increasingly concerned about the future of the Nippon deal.
US Steel slumped as much as 11% on Thursday to $36.38, but pared gains after Bloomberg reported Goncalves’ comments, closing at $38.26. The stock still dropped about 18% in two days, the biggest such loss since 2020, and is trading sharply below the Nippon offer of $55 per share.
Read More: Cliffs Weighs Lowball Bid for US Steel With Union Backing (2)
Biden’s statement marks a rare presidential intervention in a transaction that outside an election year would have drawn less public scrutiny.
Despite its storied history, US Steel’s role in the economy has diminished over several decades, a period during which producers in Asia have risen to dominate the global steel market. And while Nippon Steel’s proposed $14.1 billion acquisition targets a historic business name, a takeover in the US commodities industry by a company based in a friendly country is hardly unusual.
Biden’s comments have also shone a fresh light on the influential position held by the United Steelworkers union and its leader, David McCall. Biden called McCall Thursday morning, reiterating that “he has the steelworkers’ back,” the White House said in a statement. For its part, the union said Thursday afternoon in a statement that it welcomed Biden’s call for US Steel to remain domestically owned and operated, saying that the president’s statement should “end the debate.”
Nippon said that it has “provided significant commitments to the USW in our continued efforts to reach a mutually agreeable resolution. These include job security, pension security, capital investment, technology sharing, financial reporting, and the ability to enforce contractual obligations post-closing.”
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