In the face of political opposition and union apprehensions, Nippon Steel remains resolute in its $14.9 billion acquisition of US Steel (NYSE:X).
What Happened: During the company’s annual results announcement, Chair Takahiro Mori acknowledged the political controversy surrounding the deal but confirmed that no additional concessions to the steelworkers’ unions are currently in the pipeline, Financial Times reported on Thursday. The company reassured that the merger would not lead to job losses or plant shutdowns.
"It is hard to imagine it becoming more politicized, and since it will not be political beyond the presidential election, I think there is a possibility of a calmer discussion once the political leverage of the USW [United Steelworkers Union] is gone. So my determination to close [the deal] as soon as possible has not changed," Mori said.
While the European Union has already approved the deal earlier this week, U.S. lawmakers have ramped up their antitrust scrutiny, which, according to Nippon Steel, will postpone the acquisition’s finalization to the “third or fourth quarter” of 2024.
The proposed acquisition of the Pittsburgh-based steelmaker in December ignited bipartisan political resistance. Both President Joe Biden and former President Donald Trump expressed their opposition, citing worries over job and national security.
Why It Matters: In April, Nippon Steel formalized its commitment to the United Steelworkers (USW) union to support its acquisition bid. The commitment included $1.4 billion in capital spending and a guarantee of no layoffs through at least 2026.
However, a U.S. Senator urged the Biden administration to scrutinize the deal, highlighting national security concerns due to Nippon Steel's connections with the Chinese steel industry.
Price Action: US Steel closed 0.60% higher at $38.36 on Wednesday while it was trading at $38.05 in the pre-market on Thursday, according to Benzinga Pro.
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