Politics complicate U.S. Steel sale to Nippon
The planned sale of U.S. Steel is facing headwinds and complications by the day. On Saturday, the Committee on Foreign Investment in the United States (CFIUS) told Nippon Steel in a letter that the proposed $14 billion acquisition of U.S. Steel would pose a national security risk by hurting the US steel industry, according to multiple reports.
Secondly, with a general election approaching, both current U.S. presidential candidates have publicly stated they would block the planned sale of the Pittsburgh-based company to Japanese company Nippon if elected. That appears to be only part of the drama.
U.S. Steel then said on Wednesday it has not received any update or executive order in relation to the CFIUS process, countering the committee's assertion from the previous weekend.
"We continue to stand by the fact that there are no national security issues associated with this transaction, as Japan is one of our most staunch allies," U.S. Steel said in the statement. "We fully expect to pursue all possible options under the law to ensure this transaction, which is best future for Pennsylvania, American steelmaking, and all of our stakeholders, closes.”
Finally, Wednesday also featured U.S. Steel CEO David Burritt stating that the company would close steel mills and likely move its headquarters out of Pittsburgh if its originally planned sale to Nippon were to collapse or be blocked. This came alongside a broader statement and rally from employees.
Employees of United States Steel Corporation hosted a rally at the U. S. Steel Tower in Pittsburgh in support of the Nippon Steel transaction Wednesday. Employees called on elected officials in Pennsylvania and across the nation to recognize the significant merits of the transaction for U. S. Steel employees, communities, customers, and American steelmaking.
“Today’s rally is about displaying support for the transaction with Nippon Steel. We want elected leaders and other key decision makers to recognize the benefits of the deal as well as the unavoidable consequences if the deal fails,” said President and Chief Executive Officer of U. S. Steel, David B. Burritt.
Without the Nippon Steel transaction, the company says, U. S. Steel "will largely pivot away from its blast furnace facilities, putting thousands of good-paying union jobs at risk, negatively impacting numerous communities across the locations where its facilities exist, and depriving the American steel industry of an opportunity to better compete on the global stage."
The company added that "In addition to moving away from integrated steelmaking, the lack of a deal with Nippon Steel raises serious questions about U. S. Steel remaining headquartered in Pittsburgh."
The departure of U. S. Steel, a company that has been making steel in the Mon Valley since 1901, would likely deprive the Pittsburgh area of jobs, tax revenue, and community-based contributions. A 2023 economic impact study shows that U. S. Steel’s operations in PA generated $3.6 billion in total economic impact, supported and sustained 11,417 jobs through its operations and purchases from the local supply chain, and generated $138.2 million in state and local taxes as a result of operations and capital spending.
Here's a brief timeline of events, according to the U.S. Steel website:
On December 18, 2023, Nippon Steel announced that it would acquire U. S. Steel and that together, the companies would create “the best steelmaker with world-leading capabilities.”
U. S. Steel stockholders approved the transaction on April 12, 2024. More than 98% of the shares that were voted at the Special Meeting voted in favor of the transaction.
On May 30, 2024, Nippon Steel and U. S. Steel announced that they had received all regulatory approvals outside of the United States related to the proposed transaction.
On August 28, 2024, Nippon Steel announced plans to invest over $2.7 billion in USW-represented facilities at Mon Valley Works in Pennsylvania and Gary Works in Indiana in support of the future of manufacturing for those communities. "Those investments are subject to the closing of the transaction with U. S. Steel and receipt of necessary regulatory approvals," U.S. Steel states. "A stand-alone U. S. Steel would not make the same financial commitments."
Founded in 1901, United States Steel Corporation is a leading steel producer.
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