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Written by Yuka Obayashi, Katja Golubkova, and Ritsuko Shimizu
TOKYO (Reuters) – Nippon Steel’s vice chairman plans to return to the United States this week for further talks on the proposed takeover of US Steel, and will consider selling some assets if necessary to complete the deal.
The visit of Vice Chairman Takahiro Mori shortly after a May 20-26 trip highlights efforts by Nippon Steel to complete the purchase amid increasing regulatory scrutiny and political opposition. This includes resistance from President Joe Biden, who wants US Steel to remain locally owned, and objections from the powerful United Steelworkers (USW) union over fears of job losses.
The deal will give Nippon Steel greater access to the lucrative US market and advance its long-term financial goals.
The two steelmakers said last month that they had received all regulatory approvals outside the United States for their proposed $14.9 billion merger, a step forward toward completing the controversial deal.
Mori said in an interview on May 30 that he would return to the United States this week for more talks, including in Washington, D.C. It follows his May 20-26 trip to meet with business and political leaders, including four U.S. senators, and community leaders in Pennsylvania, where US Steel is headquartered.
Mori said Nippon Steel may consider selling some assets if US regulators require it to approve the deal.
He said, “If the American authorities tell me: You have to do this, otherwise this deal will not be accepted, in this case we must study this matter seriously.”
A manufacturing plant in Calvert, Alabama, jointly owned by Nippon Steel and Luxembourg-based ArcelorMittal (NYSE:), is the focus of antitrust concerns by U.S. authorities, Politico reported in March.
However, Mori played down the possibility of selling any assets, saying: “I don’t think that’s necessary to get this deal done.”
During his visit in May, Mori said he pointed to Sumitomo Metallurgical Corporation’s 2011 acquisition of U.S. Standard Steel, now part of Nippon Steel, as an example of what he hopes the purchase of U.S. steel will achieve.
He said Standard became profitable in 2013 after that deal and continued to make a profit by transferring technology and dispatching highly qualified engineers from Japan.
Work security
Nippon Steel has sought to address job security concerns raised by the USW by pledging to honor all agreements between US Steel and the union. It also promises to invest $1.4 billion to modernize U.S. steel mills.
However, he said a number of meeting requests made by Morey to the USW president since their last meeting in March have not been granted.
“The USW says our offers are not good enough, but it is not clear what is not good enough,” Mori said, noting the need for a face-to-face meeting. “We are always open to talk.”
Mori said that the world’s fourth steelmaker wants to build public opinion to support the deal, hoping that this will push the union to the table, adding that his confidence in the success of the deal is “getting stronger.”
In an email to Reuters, USW called Nippon Steel’s proposals “hollow promises.”
“USW has already expressed its deep and continuing concerns about the proposed sale and agrees with President Biden and others who have called for US Steel to remain locally owned and operated,” it said.
Mori believes that the acquisition is likely to go more smoothly after the US presidential elections, as the deal will no longer be a political issue.
If completed by the end of December as planned, the deal should boost Nippon Steel’s annual business profits by 150 billion yen ($954 million) or more, helping achieve its long-term goal of reaching $1 trillion in profits. yen in fiscal year 2025. Morey said.
($1 = 157.2000 yen)
