Biden issues statement opposing Nippon's acquisition of US Steel

It is "vital" for US Steel to remain a domestically owned and operated company, US President Joe Biden said in a statement March 14, signaling the company's proposed sale to Japan's Nippon Steel could face opposition from the White House.

"It is important that we maintain strong American steel companies powered by American steel workers," Biden's statement reads. "I told our steel workers I have their backs, and I meant it. US Steel has been an iconic American steel company for more than a century, and it is vital for it to remain an American steel company that is domestically owned and operated."

This marks the first time Biden has spoken publicly on the transaction.

US Steel and Japan's largest steelmaker first announced the deal, equating to more than $14 billion, Dec.18.

Biden's statement comes as he is scheduled to travel to the Midwest March 14 for a campaign event.

Biden, who faces reelection in November, has centered unions as part of his administration and received the United Steelworkers' endorsement in the 2020 presidential election.

Requests for comment to US Steel and Nippon were not immediately returned.

Former US president Donald Trump, the presumptive Republican nomination for the 2024 Presidential election, said in February he would "absolutely" block Nippon's purchase of US Steel should he be re-elected.

USW opposition to merger

The USW, which has spoken out against the proposed acquisition since its announcement, has been engaging with members of Congress to raise its concerns over the "ramifications the proposed USS-Nippon deal will have on [US] national and economic security."

As part of this effort, the USW sent materials to both the US House of Representatives and Senate March 1 urging lawmakers to oppose the proposed merger. Lawmakers, particularly in states where US Steel has union operations, have issued calls for increased scrutiny of the deal.

The USW has said it is concerned about its existing commitments with US Steel under new ownership, including pensions and retiree health care, profit sharing and promised capital expenditures. The union had backed US steelmaker Cleveland-Cliffs' attempt to purchase the company, assigning the company its right to bid in August.

"Allowing one of our nation's largest steel manufacturers to be purchased by a foreign-owned corporation leaves us vulnerable when it comes to meeting both our defense and critical infrastructure needs," USW International President David McCall said in a statement March 14. "The president's statements should end the debate: US Steel must remain 'domestically owned and operated.' President Biden told USW members he has our backs, and there's no question that he meant it. We're grateful for his unfailing support and his ongoing commitment to advancing the interests of working families and their communities."

Combined US Steel-Nippon presence

The combined company would boost Nippon's annual crude steel production capacity to 86 million mt/year. A successful transaction could make the combined entity the world's third largest steel producer, after China's Baowu Group and Luxembourg-based Arcelor Mittal, according to calculations based on the World Steel Association data.

Nippon Steel's manufacturing base is in Japan and the company has presence in 15 additional countries including, the US and India. Most notably, Nippon operates the AM/NS Calvert flat-rolled steel joint venture in Alabama with ArcelorMittal, owning 50% of the 5.3 million mt/year operation.

In its Q4 earnings report released Feb. 1, US Steel CEO David Burritt said the company expects the Nippon acquisition to close in the second or third quarter of 2024, in line with the expected timeline for close given when the deal was first announced.

In proxy materials filed Dec. 18 with the US Securities and Exchange Commission, US Steel said the acquisition is subject to approval by the Committee on Foreign Investment in the US and that Nippon has agreed to obtain CFIUS approval. The CFIUS has the authority to block, modify or unwind transactions and could refer to the President for a decision.

Prior to Biden's statement, national economic advisor Lael Brainard in December said the US Steel-Nippon deal "looks like the type of transaction that the interagency committee on foreign investment Congress empowered and the Biden Administration strengthened is set up to carefully investigate."

"This administration will be ready to look carefully at the findings of any such investigation and to act if appropriate," Brainard said in a statement.

US Steel will hold a special meeting of its stockholders April 12 to vote on the proposed transaction, according to a proxy statement filed with the US Securities and Exchange Commission.