AFP
22 December 2023·
Nippon and US Steel asked a federal interagency panel to review their proposed $14.1 billion deal following protests on Capitol Hill (Kazuhiro NOGI)
A proposed deal that would see US Steel Corp bought by Japan's Nippon Steel should be closely investigated by American authorities, the White House said Thursday, warning it could have national security implications.
Unveiling the planned transaction this week, the two companies depicted the deal as a marriage of the holders of top technologies that would boost steel output and accelerate efforts toward decarbonization.
But US Steel's possible sale abroad has triggered furious criticism in Washington and from trade unions.
President Joe Biden "believes the purchase of this iconic American-owned company by a foreign entity -- even one from a close ally -- appears to deserve serious scrutiny in terms of its potential impact on national security and supply chain reliability," National Economic Advisor Lael Brainard said in a statement.
The White House's intervention came as the companies asked the Committee on Foreign Investment in the United States (CFIUS) -- an interagency body established to review foreign takeovers of US firms -- to evaluate Nippon's $14.1 billion acquisition of Pittsburgh-based US Steel.
"We look forward to a successful review," a statement from US Steel's media office said.
"This is a strongly positive development for American steel, American jobs and America's national security," it said.
Brainard said President Biden's administration "will be ready to look carefully at the findings of any such investigation and to act if appropriate."
- 'Outrageous' -
In Tokyo, Japan's Industry Minister Ken Saito said Nippon Steel "needs to respond appropriately to necessary procedures."
Relations between the United States and Japan were "stronger than ever," Saito told reporters, adding he would not comment further because the deal was a matter between the companies.
The combined company vowed to honor contract agreements between US Steel and the United Steelworkers (USW) union.
But the USW ripped the proposed deal as reflective of a "greedy, shortsighted attitude" of US Steel, which dates to 1901, and questioned the ability of Nippon to honor contracts.
USW said late Thursday that it welcomes the US administration's assessment that heightened scrutiny was needed for the announced sale.
"Our union shares many of the concerns expressed in today's White House statement, including how this deal may impact the future of domestic steel production," USW International President David McCall said.
The transaction also drew bipartisan howls on Capitol Hill, with Pennsylvania Democratic Senator John Fetterman calling the deal "absolutely outrageous," adding that "steel is always about security as well."
Ohio Senator JD Vance and two other Republicans asked Treasury Secretary Janet Yellen, who chairs CFIUS, to block the deal, calling domestic steel production "vital to US national security."
A spokesperson for the Treasury Department declined to comment.
CFIUS is required to complete a review of a transaction within 45 days. The committee can then launch an investigation of up to another 45 days.
The committee can approve the transaction afterward, require mitigation steps to address national security concerns or refer the transaction to the president if it determines the deal should be blocked.
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Nippon Steel's $14.1 billion deal for US Steel sparks criticism
AFP
Japan's Nippon Steel has agreed to buy US Steel Corp for $14.1 billion, the company said in a statement
Branden EASTWOOD
Japan's Nippon Steel agreed to buy US Steel Corp for $14.1 billion, the companies announced on Monday, sparking criticism about the firm's ownership in an industry crucial to US national security.
A major US steelworkers' union and a top US politician came out against the Japanese conglomerate's all-cash agreement to acquire the US firm for $55 per share.
The deal price marks a 40 percent premium on US Steel's closing price on Friday and represents an equity value of about $14.1 billion, the companies said in a statement.
Nippon will also assume the US firm's debt, taking the total value of the agreement to $14.9 billion.
The US company's share price finished the trading day up more than 26 percent on Wall Street following the announcement.
Japan's Nippon Steel agreed to buy US Steel Corp for $14.1 billion, the companies announced on Monday, sparking criticism about the firm's ownership in an industry crucial to US national security.
A major US steelworkers' union and a top US politician came out against the Japanese conglomerate's all-cash agreement to acquire the US firm for $55 per share.
The deal price marks a 40 percent premium on US Steel's closing price on Friday and represents an equity value of about $14.1 billion, the companies said in a statement.
Nippon will also assume the US firm's debt, taking the total value of the agreement to $14.9 billion.
The US company's share price finished the trading day up more than 26 percent on Wall Street following the announcement.
- Union, senator slam deal -
While the markets responded positively to the deal, the United Steelworkers (USW) union -- which represents 1.2 million US steelworkers and retirees -- did not.
In a statement, USW International President David McCall said the deal demonstrated "the same greedy, shortsighted attitude that has guided US Steel for far too long."
Neither US Steel nor Nippon "reached out to our union regarding the deal, which is in itself a violation of our partnership agreement that requires US Steel to notify us of a change in control or business conditions," he added.
The US Senator for Pennsylvania John Fetterman, who represents a state with many steel plants, came out against the Nippon deal and vowed to try and block it from going ahead.
"It's absolutely outrageous that they have sold themselves to a foreign nation, and a company," he said in a video posted to X, formerly Twitter.
"Steel is always about security as well," he continued, adding: "I'm going to fight for the steelworkers and their union way of life here."
In a statement, Nippon Steel said it would honor all collective bargaining agreements with USW, as part of a "commitment to maintaining strong stakeholder relations."
US Steel launched a strategic review in August after receiving several unsolicited offers for a partial or total takeover.
It rejected an offer from its main US competitor, Cleveland-Cliffs, which valued the merger at around $10 billion.
USW had indicated it supported the deal put forward by Cleveland-Cliffs.
On Monday, Nippon Steel said the acquisition will significantly expand its current production in the United States to an annual crude steel capacity of 86 million metric tons.
"We are excited that this transaction brings together two companies with world-leading technologies and manufacturing capabilities, demonstrating our mission to serve customers worldwide," Nippon Steel President Eiji Hashimoto said in a statement.
He added that the deal also underscored the firm's "commitment to building a more environmentally friendly society through the decarbonization of steel."
"Today's announcement also benefits the United States -- ensuring a competitive, domestic steel industry, while strengthening our presence globally," US Steel President and CEO David Burritt said.
"Our shared decarbonization focus is expected to enhance and accelerate our ability to provide customers with innovative steel solutions to meet sustainability goals," he added.
US Steel's appeal, according to analysts and industry insiders, stems from the fact it is about to complete a costly investment plan, including the installation of electric arc furnaces instead of coal-fired blast furnaces, to reduce its carbon footprint.
Both boards of directors have unanimously approved the deal, which is subject to approval by US Steel's shareholders, the firms said.
Nippon Steel has some 160,000 workers globally in countries including Japan, India, Brazil, Thailand and Sweden.
The firm has had a presence in the United States for around four decades, and currently employs around 4,000 people -- 620 of which are USW workers.
US Steel, which was founded in 1901 and had almost 23,000 employees at the end of last year, has its manufacturing facilities in the United States and Slovakia.
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