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Written by Trevor Hunnicutt and David Brunnstrom
WASHINGTON (Reuters) – U.S. President Joe Biden plans to express concerns about Nippon Steel’s $14.9 billion bid to buy U.S. Steel, officials said on Wednesday, raising the possibility that the deal could face greater challenges. The company’s stock price fell nearly 13% on speculation that this may be the case. political opposition.
The issue casts a shadow on the April 10 summit between Biden and Japanese Prime Minister Fumio Kishida, which was aimed at strengthening the long-standing security alliance between the two countries in the face of China’s growing power. there is a possibility.
Nippon Steel struck a deal in December to buy the iconic 122-year-old American steelmaker at a hefty premium, betting that U.S. Steel would benefit from spending and tax incentives from Biden’s infrastructure bill. .
But several Democratic and Republican U.S. senators have rejected the deal, citing national security concerns or questioning why the companies did not consult with U.S. Steel’s main unions before announcing it. criticizing.
Donald Trump, Biden’s rival in the November US presidential election, has said that if elected, he would block the acquisition of US Steel. The White House said in December that the deal needed careful scrutiny given U.S. Steel’s core role in producing materials critical to national security.
The White House declined to comment Wednesday, but people familiar with the matter said Mr. Biden was expected to release a statement about the acquisition plan before Mr. Kishida’s state visit.
The Financial Times, which first reported the news, said U.S. officials and lawyers drafted a statement and the White House informally notified the Japanese government of Biden’s decision.
The Japanese embassy in Washington did not respond to a request for comment.
Matthew Goodman, a trade and economics expert at the Council on Foreign Relations think tank in Washington, said the issue could overshadow the summit and damage Mr. Kishida, who is already struggling politically at home. Ta.
“Japan’s prime minister must show that he not only controls the relationship with the United States, but strengthens it,” Goodman said. “So to the extent that this goes against that narrative domestically politically, that’s a problem.”
Goodman believes the case for an acquisition to pose a risk to U.S. national security is “dubious” and that questioning an investment from a supposedly trusted security partner could be deeply damaging to the relationship. He said that there is.
“They become more politically relevant in an election year when both candidates are appealing to steelworkers and unions,” he said of Biden and Trump.
Nippon Steel and U.S. Steel said in a joint statement that “an objective and comprehensive review of this transaction demonstrates that it will strengthen U.S. jobs, competition, and economic and national security.” He said that he would welcome it.
Goodman said there are long-standing concerns in the United States about Japan’s labor practices and “non-support for unionization among workers in Japanese factories in the United States, far beyond steel.”
The companies said they are “in active and engaged discussions with the United Steelworkers union, and these discussions are ongoing.”
Founded in 1901 by some of America’s most influential figures, including Andrew Carnegie, J.P. Morgan, and Charles Schwab, U.S. Steel was deeply involved in the industrial recovery following the Great Depression and World War II.
The Pittsburgh-based company began a formal review of its strategic options last year after rejecting a takeover offer from steelmaker Cleveland-Cliffs.
The company’s stock price has been under pressure after several quarters of declining sales and profits, making it an attractive takeover target for rivals looking to buy into the maker of steel used in the auto industry.
U.S. Steel stock closed 12.8% lower at $40.86 on Wednesday, well below Nippon Steel’s offer of $55 per share.
(Reporting by Trevor Hunnicutt and David Brunnstrom in Washington and Abhijit Ganapavaram in Bengaluru; Editing by Devika Shamnath, Arun Koyulu and Jamie Freed)
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