US Steel investors approve proposed buyout by Nippon Steel
Labour union is concerned about potential job losses and legislators are worried about security
14 April 2024 - 17:46
byAatreyee Dasgupta
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Nippon Steel logos at the company's headquarters in Tokyo, Japan, March 18 2019. Picture: REUTERS/Yuka Obayashi
US Steel shareholders on Friday approved its proposed $14.9bn acquisition by Japan’s Nippon Steel, as expected, taking the merger one step closer to completion even as political opposition to the deal mounts.
US Steel said that over 98% of the votes were in favour of the deal under which Nippon will pay $55 per share, an amount that represented a hefty premium when the takeover was announced in December.
Since then, however, several US legislators have come out in opposition to the deal, citing national security concerns. President Joe Biden has said US Steel must remain a domestically owned American firm.
US Steel’s shares closed down 2.1% at $41.33 on Friday, well below Nippon Steel’s offer of $55 a share, reflecting uncertainty over whether the deal will secure regulatory approval.
The deal has drawn strong criticism from the United Steelworkers (USW) labour union, which is worried about potential job losses.
“We are not surprised by stockholders electing to cash in and sell out the iconic American company’s employees and retirees,” the USW said in response to the vote.
Regulators are also scrutinising the deal. The committee on foreign investment in the US (CFIUS), a powerful panel that reviews foreign investments in US companies, has met with the parties to discuss the deal, Reuters has reported.
The US justice department has opened an in-depth antitrust investigation into the takeover, Politico reported on Wednesday.
Nippon has pledged no job cuts as a result of the deal, to honour all agreements between the union and US Steel, as well as to move its own US headquarters to Pittsburgh where US Steel is based.
The Japanese steelmaker said in a statement that it is “confident” the acquisition will “protect and grow US Steel and bring significant benefits to its stakeholders ... as well as to the American steel industry and the US as a whole”.
“We look forward to collaborating closely with US Steel to move forward together as the ‘best steelmaker with world-leading capabilities,'” said vice- chair Takahiro Mori.
Friday’s vote “represents a major step,” the company said.
Nippon Steel won the race for US Steel over rivals Cleveland-Cliffs, ArcelorMittal and Nucor.
The deal is expected to close in the second or third quarter of this year, the companies have said previously.
Bloomberg News reported on Friday, citing people familiar with the matter, that both steelmakers are expected to announced they now anticipate the deal to close in the second half of 2024.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
US Steel investors approve proposed buyout by Nippon Steel
Labour union is concerned about potential job losses and legislators are worried about security
US Steel shareholders on Friday approved its proposed $14.9bn acquisition by Japan’s Nippon Steel, as expected, taking the merger one step closer to completion even as political opposition to the deal mounts.
US Steel said that over 98% of the votes were in favour of the deal under which Nippon will pay $55 per share, an amount that represented a hefty premium when the takeover was announced in December.
Since then, however, several US legislators have come out in opposition to the deal, citing national security concerns. President Joe Biden has said US Steel must remain a domestically owned American firm.
US Steel’s shares closed down 2.1% at $41.33 on Friday, well below Nippon Steel’s offer of $55 a share, reflecting uncertainty over whether the deal will secure regulatory approval.
The deal has drawn strong criticism from the United Steelworkers (USW) labour union, which is worried about potential job losses.
“We are not surprised by stockholders electing to cash in and sell out the iconic American company’s employees and retirees,” the USW said in response to the vote.
Regulators are also scrutinising the deal. The committee on foreign investment in the US (CFIUS), a powerful panel that reviews foreign investments in US companies, has met with the parties to discuss the deal, Reuters has reported.
The US justice department has opened an in-depth antitrust investigation into the takeover, Politico reported on Wednesday.
Nippon has pledged no job cuts as a result of the deal, to honour all agreements between the union and US Steel, as well as to move its own US headquarters to Pittsburgh where US Steel is based.
The Japanese steelmaker said in a statement that it is “confident” the acquisition will “protect and grow US Steel and bring significant benefits to its stakeholders ... as well as to the American steel industry and the US as a whole”.
“We look forward to collaborating closely with US Steel to move forward together as the ‘best steelmaker with world-leading capabilities,'” said vice- chair Takahiro Mori.
Friday’s vote “represents a major step,” the company said.
Nippon Steel won the race for US Steel over rivals Cleveland-Cliffs, ArcelorMittal and Nucor.
The deal is expected to close in the second or third quarter of this year, the companies have said previously.
Bloomberg News reported on Friday, citing people familiar with the matter, that both steelmakers are expected to announced they now anticipate the deal to close in the second half of 2024.
Reuters
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