Biden to raise concern over Nippon Steel’s deal for US Steel, source says
WASHINGTON – US President Joe Biden plans to express concern over Nippon Steel’s proposed $14.9 billion purchase of US Steel, a person familiar with the matter said on Wednesday, pushing the US company’s stock nearly 13% lower on bets the deal could face greater political opposition.
The issue has the potential to overshadow an April 10 summit between Biden and Japanese Prime Minister Fumio Kishida aimed at boosting the long-standing security alliance between their countries in the face of growing Chinese strength.
In December, Nippon Steel clinched a deal to buy the 122-year-old iconic US steelmaker for a hefty premium, betting that US Steel would benefit from the spending and tax incentives in Mr. Biden’s infrastructure bill.
However, several Democratic and Republican US senators have criticized the deal, citing national security concerns or raising questions about why the two companies did not consult US Steel’s main union ahead of the announcement.
Donald Trump, Mr. Biden’s rival in the November US presidential election, has said he would block the acquisition of US Steel if elected. The White House said in December the deal needed to be carefully scrutinized given US Steel’s core role in producing a material that is critical to national security.
The White House declined to comment on Wednesday, but a person familiar with the matter said Biden would issue a statement about the planned acquisition before Kishida arrives for his state visit.
US officials and lawyers have drafted the statement and the White House has privately informed the Japanese government of Mr. Biden’s decision, according to the Financial Times, which first reported the news.
Japan’s top government spokesperson Yoshimasa Hayashi declined to comment on the report. “The Japan-US alliance is stronger than ever, and the two countries will continue to work together … in the field of economic security,” Mr. Hayashi, chief cabinet secretary, told reporters on Thursday, echoing recent remarks by Japanese officials.
Matthew Goodman, a trade and economics expert at Washington’s Council on Foreign Relations think tank, said the issue could overshadow the summit and be damaging for Mr. Kishida, who is already struggling politically at home.
“A prime minister of Japan has to demonstrate that he has the US relationship not only under control, but that he’s enhancing it,” Mr. Goodman said. “So to the extent this runs counter to that narrative politically at home, it’s problematic.”
Mr. Goodman said he thought the case of the acquisition being a risk to US national security was “dubious” and questioning investments from a supposedly trusted security partner could be very damaging to the relationship.
“It’s much more to do with politics in an election year when both nominees are appealing to support from steel workers and unions,” he said of Mr. Biden and Mr. Trump.
In a joint statement, Nippon Steel and US Steel said they welcomed the Biden administration’s scrutiny of the transaction, as “an objective and comprehensive review of this transaction will demonstrate that it strengthens US jobs, competition, and economic and national security.”
Mr. Goodman said there have been long-standing concerns in the United States about Japanese labor practices and “non-support for unionization of workers in Japanese-owned factories in the US well beyond steel.”
The companies said they have had “active, dedicated discussions with the United Steelworkers, which are ongoing.”
US Steel, founded in 1901 by some of the biggest US magnates, including Andrew Carnegie, J.P. Morgan and Charles Schwab, became intertwined with the industrial recovery following the Great Depression and World War Two.
Last year, the Pittsburgh-based company launched a formal review of its strategic options after rebuffing a takeover offer from steelmaker Cleveland-Cliffs.
Its shares had come under pressure following several quarters of falling revenue and profit, making it an attractive takeover target for rivals looking to add a maker of steel used by the automobile industry.
US Steel shares closed 12.8% lower at $40.86 on Wednesday, well below Nippon’s offer of $55 per share. – Reuters