Sunday, September 15, 2024

Nippon Steel bid for US Steel faces Sept. 23 review deadline

Reuters | September 13, 2024 | 

Credit: US Steel

A powerful US national security panel reviewing Nippon Steel’s $14.9 billion bid for US Steel faces a Sept. 23 deadline to recommend whether the White House should block the deal, two people familiar with the matter said.


The Committee on Foreign Investment in the United States has until that day to complete its second 90-day review of the Japanese company’s proposed takeover of US Steel, the people said, declining to be named because the matter was not public.

On that date, CFIUS officials could grant a request by the companies to extend the review another 90 days, which would defer the politically sensitive decision until after the Nov. 5 election.

If the panel does not do that, it could approve the deal, possibly with measures to address national security concerns, or it could recommend President Joe Biden block it.

The deal has become a political hot potato and faces high-profile opponents including Biden, Democratic presidential candidate and Vice President Kamala Harris and Republican Donald Trump. They oppose foreign ownership of US Steel, which produces a strategically and symbolically important commodity used to build ships, trains and infrastructure.

“The president’s position is that it is vital for US Steel to remain an American steel company that is domestically owned and operated,” White House adviser Saloni Sharma said.

US Steel is headquartered in Pennsylvania, a crucial swing state in the presidential election. The United Steel Workers union, which endorsed Harris, opposes the deal.

As the clock ticks down to the Sept. 23 deadline, the politics and uncertainty surrounding the deal are in the spotlight. The companies have sought to save the acquisition after the panel said it would harm the security of US steel supplies in an Aug. 31 letter seen by Reuters.

The companies countered in a 100-page letter, also exclusively reported by Reuters, the deal would increase US steel output and asked for an extension to address concerns.

CFIUS and Nippon Steel declined to comment and US Steel did not respond to a request for comment.

A decision is not expected in the coming days, according to a senior administration official. The Washington Post reported on Friday a decision could be postponed until after the election.

Sources said the companies hope recent support for the deal, including a letter from business groups like the Chamber of Commerce raising concerns the transaction is being influenced by political pressure, could turn the tide.

Robust CFIUS reviews take 90 days but it is common for companies to withdraw their filings and resubmit them to give the companies more time to address the panel’s concerns. This resets the 90-day clock.

Nippon Steel and US Steel filed for the review in March, and CFIUS allowed them refile in June, starting a second 90-day clock that runs out on Sept. 23, sources said.

(By Alexandra Alper, Echo Wang, Karen Freifeld, Jeff Mason, David Shepardson and John Geddie; Editing by Cynthia Osterman)


Nippon Steel's Investment Could Revitalize U.S. Steel Industry

By Metal Miner - Sep 12, 2024,

Nippon Steel's proposed acquisition of U.S. Steel has been stalled for nine months due to national security concerns and opposition from labor unions.

The deal could potentially revitalize U.S. Steel through modernization and increased efficiency, but also raises concerns about job security and foreign ownership.

If the deal falls through, U.S. Steel may face limited options, including a potential acquisition by Cleveland-Cliffs or continued struggles to compete with international rivals.


Due to numerous obstacles, Nippon Steel’s $14.9 billion proposed acquisition of U.S. Steel has been on hold for nine months. The agreement is currently under investigation from all angles, with heavy resistance from steel industry labor unions and politicians. For manufacturers and procurement specialists involved in the metal supply chain, comprehending the details of this purchase is crucial.
Why is the Deal Facing Roadblocks?

The main barrier to the accord is worries about national security. U.S. Steel provides essential commodities to the automotive, construction and defense industries. And because United States’ infrastructure depends heavily on steel. Therefore, any transfer of ownership to a foreign company—even one as friendly as Japan—raises concerns about the nation’s dependence on foreign suppliers of crucial resources.?

To further complicate matters, labor unions, particularly the United Steelworkers (USW), have vocally opposed the Nippon Steel takeover. The USW instead continues to back Cleveland-Cliffs’ rival offer, which also targets U.S. Steel. American workers consider Cleveland-Cliffs a safer option because it is a local producer with strong union ties. The union is especially worried about how foreign ownership could affect collective bargaining agreements and job security.

Arguments for Letting the Deal Proceed

Despite the opposition, there are also strong arguments supporting the agreement, as it could potentially benefit U.S. Steel and the greater steel industry. Nippon Steel’s commitment to heavily investing in modernizing U.S. Steel’s outdated mills could offer the business a crucial technological boost. With these cutting-edge production techniques, U.S. Steel could reduce production costs, improve operational efficiency and compete more effectively with major international players like India’s Tata Steel and China’s Baowu Steel.

Furthermore, many steel industry observers think worries about foreign ownership are exaggerated because Japan is a significant ally of the United States. They claim that Japan has a long history of investing in the American economy, especially in fields like technology and the automotive industry.

By contributing financial resources and technological know-how, Nippon Steel might contribute to job security and maintain U.S. Steel’s competitiveness in the worldwide market.

For manufacturers and procurement professionals tracking steel prices and supply chains, the deal’s outcome could significantly impact domestic steel pricing. Increased investment from Nippon Steel could mean higher production capacity and a more efficient supply chain, which could ultimately stabilize prices for critical metal products.
The Path Forward: Uncertainty Looms for the Steel Industry

As of September 2024, the acquisition remains uncertain. Many expect President Biden to comment soon, and the CFIUS has yet to issue a final decision. If the deal is blocked, U.S. Steel may face limited options. Cleveland-Cliffs remains interested in buying U.S. Steel, but antitrust concerns would likely arise due to the potential concentration of steel production in a single company.

In the meantime, U.S. Steel continues to invest in its mini-mill operations, such as the Big River Steel plant, which shows promise for future technological advancements and increased production. However, the firm may struggle to compete with international rivals without significant investments in its aging facilities.
Implications for the Metal Supply Chain

For procurement professionals and industry watchers, the ongoing Nippon Steel buyout saga highlights how global steel market dynamics can significantly impact domestic pricing and supply chains. Whether the deal proceeds or not, the decision will likely have long-term implications for the U.S. steel industry.

A Nippon Steel acquisition could bring needed modernization and efficiency to U.S. Steel, while a blocked deal could open the door to further consolidation with Cleveland-Cliffs. With MetalMiner’s help, steel sourcing companies can prepare for supply chain disruptions or price volatility. See the MetalMiner metal catalog to see if your steel forms and gauges are covered by MetalMiner’s price forecasting.

By the Metal Miner Team

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