The takeover of the American steelmaker US Steel by the Japanese Nippon Steel, for nearly $15 billion, hit a major obstacle on Thursday: President Joe Biden, campaigning for a second term, opposes it on behalf of of the defense of American “workers”.
“US Steel has been an iconic company for more than a century, and it is vital that it remains an American company, controlled and managed from the United States
,” Joe Biden said in a statement.
“It is important that we maintain strong American steel companies, operated by American workers
,” he added.
Concern is particularly strong in Pennsylvania (north-east), the state in which US Steel's headquarters are located and which will be decisive in the presidential election in November.
The two groups reacted in a joint statement, saying they had
“confidence that (their) partnership (would be) a success”
for employment and the supply chain in the United States,
“while strengthening the competitiveness of the American economy and forging resistance against threats from China
.
In a separate statement released Friday, Nippon Steel said it was
“determined”
to complete the acquisition.
He promised not to cut jobs or close US Steel sites before September 2026,
“under certain conditions”
, and to invest an additional $1.4 billion in the American steelmaker if the transaction is finalized.
The two countries “will continue to cooperate”
US Steel shares ended Thursday down 3.36% on the New York Stock Exchange, after having already fallen 9.5% on Thursday.
On the other hand, Nippon Steel shares on the Tokyo Stock Exchange on Friday were up around 02:30 GMT (+0.39%).
Its shareholders have never been enthusiastic about this acquisition project, considered costly.
This announcement, likely to offend Tokyo, comes in the run-up to a state visit by Japanese Prime Minister Fumio Kishida to the White House, scheduled for April 10.
“The alliance with Japan is stronger than ever
,” assured John Kirby, spokesperson for the National Security Council, on Thursday.
“We look forward to this visit
. ”
“Japan and the United States will continue to cooperate (...) for sustainable economic growth in the Indo-Pacific region, maintaining and strengthening a free and open economy based on rules
,” reacted Friday Japanese government spokesperson Yoshimasa Hayashi.
If he refused to comment directly on Mr. Biden's statements on the Nippon Steel/US Steel project, Yoshimasa Hayashi thus seems to have formulated a veiled criticism of American protectionism.
For Thibault Denamiel, of the Center for International and Strategic Studies (CSIS),
“it would be understandable”
if Tokyo
“is upset by the lack of reciprocal support”
because of
“internal political pressures”
.
Joe Biden, who presents himself as a defender of American industry, had already worried about
“national security”
and the
“reliability”
of steel supplies when the marriage was announced in December.
Republican Donald Trump - who, barring any surprises, will be his opponent in November - has already promised that he would block the takeover of US Steel if he returned to the White House.
Joe Biden and Donald Trump
“are seeking the support of powerful unions which could make the difference in the crucial swing states”
, which could swing the vote to one camp or the other, notes Thibault Denamiel.
Union and political protests have multiplied.
Faced with these fears, the two steelmakers submitted their project at the end of December to the government agency responsible for assessing the risk of foreign investments for the national security of the United States, CFIUS.
If the CFIUS considers that a risk exists, it refers it to the President of the United States, who makes the final decision (validation, prohibition, green light under conditions).
Read also Japanese-American megafusion in steel
The metalworkers' union opposed to the project
US Steel launched a strategic review in August 2023 after receiving several unsolicited offers for a partial or total buyout.
The company had rejected, at the time, an offer from its American competitor Cleveland-Cliffs (CLF), which wanted a total union to form the only American steelmaker in the world's top 10 in terms of production volume (31 million tonnes).
This offer had been validated by the USW metalworkers union.
Hostile to Nippon Steel's offer, the union
“welcomes”
Joe Biden's declaration, said David McCall, its international president.
“The president's statements should put an end to the debate
,” he said.
When requested, CLF did not react.
Its boss, Lourenco Goncalves, indicated to the Bloomberg agency that he could consider a new offer, with the support of the USW, but at a price much lower than that of the Japanese.
For Matthew Miller, analyst at CFRA Research, the risk of such an operation in an election year was high.
“It is very surprising and disappointing that US Steel ignored the risks”
by opting for Nippon Steel instead of CLF, whose offer was
“very close”
at $54 per share, he said.
The Japanese giant plans to pay $55 per share, or $14.9 billion in total (debt included).
Finalization was expected, at the latest, in the third quarter of 2024. The attractiveness of US Steel stems in particular from the fact that it completed in 2023 a costly investment plan including the installation of electric arc furnaces instead coal-fired blast furnaces, to reduce its carbon footprint.