Wednesday, December 11, 2024

Biden plans to finally kill Nippon Steel bid for US Steel

Bloomberg News | December 10, 2024 | 

US President Joe Biden. (Image by Gage Skidmore, Flickr.)

President Joe Biden plans to formally block the $14.1 billion sale of United States Steel Corp. to Nippon Steel Corp. on national security grounds once the deal is referred back to him later this month, people familiar with the matter said.


The Committee on Foreign Investment in the United States panel, which has been reviewing the proposed takeover for much of this year, must refer its decision to Biden by Dec. 22 or 23, said the people, who asked to not to be identified discussing a confidential process.

It’s not clear exactly what the CFIUS review will say. However, any referral to the president suggests at least one member of the panel sees the deal posing a risk. Nippon Steel and US Steel are poised to pursue litigation over the process if Biden decides to block the merger, some of the people said.

The White House and Treasury Department declined to comment. “This transaction should be approved on its merits,” US Steel spokeswoman Amanda Malkowski said. Shares of the company were halted for volatility after falling 8.8% in New York.

“It is inappropriate that politics continue to outweigh true national security interests — especially with the indispensable alliance between the US and Japan as the important foundation,” Nippon Steel said in a statement. “Nippon Steel still has confidence in the justice and fairness of America and its legal system, and — if necessary — will work with US Steel to consider and take all available measures to reach a fair conclusion.”

The fate of the once-fabled US steelmaker has become a hot political issue since the company reached an agreement to be taken over by its Japanese suitor almost a year ago. US Steel has said the deal represents a lifeline and warned it may move its headquarters out of Pennsylvania and shutter some operations if the merger collapses.

Biden — born in US Steel’s home state of Pennsylvania — has long signaled opposition to the sale, and has said the company would remain domestically owned. At the same time, he has stopped short of a pledge to kill the deal, while President-Elect Donald Trump has promised repeatedly to block it.

The CFIUS process was extended in September with a procedural maneuver. That pushed the referral deadline to this month and raised questions about whether the deal might proceed after the election, even as Biden dug in. “I haven’t changed my mind,” he said Sept. 27.

The powerful United Steelworkers union has also opposed the deal. Vice President Kamala Harris echoed Biden’s stance during her campaign as the Democratic nominee in the presidential election.

It’s unusual for CFIUS to reject acquisitions by entities based in a friendly nation such as Japan.

The exact timing of any announcement from Biden is unclear. The president has 15 days from the referral to announce a decision. Another extension to the CFIUS process — which would punt a decision to the next administration — isn’t expected, some of the people said.

(By Josh Wingrove and Joe Deaux)


Nippon Steel slams ‘inappropriate’ politics in US deal


By AFP
December 10, 2024

The deal worth $14.9 billion including debts is being reviewed in Washington - Copyright AFP Richard A. Brooks

Kyoko HASEGAWA

Nippon Steel on Wednesday slammed the “inappropriate” role of politics after Bloomberg News reported that President Joe Biden would block its planned takeover of US Steel.

The deal worth $14.9 billion including debts is being reviewed by a body that audits foreign takeovers of US firms, helmed by Treasury Secretary Janet Yellen.

Bloomberg cited people close to the matter as saying Biden planned to block the sale on national security grounds when the audit is finished later this month.

“It is inappropriate that politics continue to outweigh true national security interests — especially with the indispensable alliance between the US and Japan as the important foundation,” a Nippon Steel statement said.

“We have engaged in good faith with all parties to underscore how the transaction will bolster American economic and national security by countering the threats posed by China,” it added.

“Nippon Steel still has confidence in the justice and fairness of America and its legal system, and — if necessary — will work with US Steel to consider and take all available measures to reach a fair conclusion.”

Embattled US Steel argues that it needs the Nippon deal to ensure sufficient investment in its Mon Valley plants in Pennsylvania, which it says it may have to shutter if the sale is blocked.

But Biden has previously expressed opposition to the takeover, which President-elect Donald Trump — who will be inaugurated on January 20 — has also said he would block.

“I am totally against the once great and powerful U.S. Steel being bought by a foreign company, in this case Nippon Steel of Japan,” Trump wrote on his Truth Social platform earlier in December.

“Through a series of Tax Incentives and Tariffs, we will make U.S. Steel Strong and Great Again, and it will happen FAST! As President, I will block this deal from happening.”

In reaction to the Bloomberg report, White House spokesperson Robyn Patterson said Biden would wait and see what the ongoing review of the deal by the Committee on Foreign Investment in the United States (CFIUS) yields.

“The president’s position since the beginning is that it is vital for US steel to be domestically owned and operated,” Patterson said.

“We have not received any CFIUS recommendation. The CFIUS process was and remains ongoing.”

US Steel shares closed down 9.7 percent Tuesday on Wall Street following the report. Nippon was down 0.1 percent in Tokyo on Wednesday.

Nippon Steel makes final push to win over US workers

Bloomberg News | December 9, 2024 | 


The U.S. Steel pig iron caster at the Gary Works, Ind. The Nippon deal faces scrutiny. Credit: U.S. Steel

Nippon Steel Corp. clarified its spending plans at US mills owned by United States Steel Corp. as part of last-ditch efforts to win over workers and politicians for its bid to buy the Pittsburgh-based steelmaker.


After meeting with United Steelworkers leaders, the Japanese firm released a letter to US Steel staff on Monday. In it, Nippon Steel said it made new commitments with regards to where and when a previously announced $1.4 billion capital expenditure commitment would be spent. The figure doesn’t include maintenance or depreciation, Nippon said.

The latest letter indicates there had been at least some interaction between the parties in recent weeks, with Nippon Steel saying the USW asked for further details about its capital expenditure plans. It’s unclear that this letter will change USW leadership’s long-held official stance of opposing the deal, but it does suggest the Japanese buyer is racing to do anything possible to get approval from the influential union before a federal review is concluded on whether to approve the $14.1 billion takeover.

“During our recent discussions with the USW leadership, we listened carefully to the USW’s requests for further details on our future plans,” Nippon Steel said, adding that after those talks it sent an additional commitment letter to USW President David McCall on Dec. 2 “addressing all the concerns raised.”

The Japanese steelmaker said it released the letter after “constructive dialogue” with Pennsylvania Governor Josh Shapiro and others, signaling that the Democrat governor — who hasn’t taken a public position on acquisition — is involved in ongoing talks. Collapse of the deal would renew questions about the future of steelmaking in Pennsylvania, where the political outcry has been concentrated.

“While the final decision on this proposed deal will ultimately be made by the White House alone, the governor will continue to be actively engaged in this process,” a spokesman for Shapiro’s office said Monday in a message to Bloomberg.

Nippon Steel’s letter also makes a previously announced $1.3 billion in additional capital expenditures legally binding. That money had been promised after an arbitration meeting. Nippon Steel is seeking to allay concerns over job security at plants that use traditional blast-furnace production from iron ore as part of its pending transaction.

McCall said the letter “demonstrates its increasing desperation to repackage empty, unenforceable promises,” according to a statement to Bloomberg. “This communication, like those that came before it, remains riddled with the same exceptions and conditions as all its previous so-called commitments, allowing Nippon to back out or shift course for no other reason than changing business plans.”

Two sources familiar with the matter said Shapiro brokered the meeting between Nippon Steel vice president Takahiro Mori and McCall, who had not met in person since the summer. The three of them met in Pittsburgh the Tuesday before the US Thanksgiving holiday, said the people, who asked not to be named discussing confidential information.

Both President Joe Biden and President-elect Donald Trump have publicly opposed the deal, which was announced a year ago and remains before federal regulators including a review by the Committee on Foreign Investment in the US, or Cfius. The USW didn’t respond to a request for comment.

US Steel shares rose as much as 3.3% to $39.70 a share Monday in New York, edging closer to Nippon Steel’s $55-a-share offer price. Nippon Steel shares rose as much as 3.4% in Tokyo on Tuesday, the biggest intraday gain in a month.

(By James Attwood and Joe Deaux)




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