The takeover of the big name in American steel US Steel by the Japanese Nippon Steel, announced in December for nearly 15 billion dollars, hit a major obstacle on Thursday: President Joe Biden, campaigning for a second term, opposes it in the name of defending American “workers”.
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“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’s important that we maintain strong American steel companies, operated by American workers. I promised American steel workers that I would support them and I only have my word,” he added.
Concern is particularly strong in the state of Pennsylvania (northeast), where US Steel’s headquarters are located and which will be decisive in the presidential election in November.
The two groups reacted shortly after in a joint statement, saying they had “confidence that (their) partnership (would be) a success for American jobs and for the American supply chain, while strengthening the competitiveness of the American economy and building resistance against threats from China.
They recalled that the Japanese group had “clearly indicated that there would be no job cuts, no factory closures or transfers of production as a result of this transaction”.
Trust
“We will continue to defend this operation and are confident that an impartial and thoughtful review will result in its approval,” they concluded.
Around 4:00 p.m. GMT, US Steel shares lost 0.69% on the New York Stock Exchange.
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.
“It would be understandable” if Tokyo “is upset by the lack of reciprocal support in a context of internal political pressures,” comments Thibault Denamiel, of the Center for International and Strategic Studies (CSIS), noting that Washington currently needs “robust relations with its partners.
Joe Biden, who presents himself as a defender of American industry, had already worried about “national security” and the “reliability” of the steel supply when the project was unveiled.
Republican Donald Trump – who, barring any surprises, will be his opponent in November – promised that he would block him if he returned to the White House, according to comments reported by the American press.
MM. Biden and Trump “are seeking the support of powerful unions which could make the difference in the crucial “swing states””, which could lean towards one camp or the other, notes Thibault Denamiel.
Protests have continued to mount among unions and political leaders.
Faced with these fears, the two groups submitted, at the end of December, their project 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).
US Steel launched a strategic review in August 2023 after receiving several unsolicited offers for a partial or total buyout.
Attraction
At the time, the company rejected an offer from its American competitor Cleveland-Cliffs, 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 was supported by the USW metalworkers’ union, which even said it would not support anyone else.
Contacted by AFP on Thursday, the union and Cleveland-Cliffs did not immediately react.
The buyout by the Japanese giant would be done entirely in cash at $55 per share, which represents $14.1 billion ($14.9 billion including debt). Finalization was expected, at the latest, in the third quarter of 2024.
US Steel had also received a proposal from the American family conglomerate Esmark Steel Group. ArcelorMittal, world number two, had been cited by the media as one of the contenders.
The appeal of US Steel stems, according to observers, in particular from the fact that it completed in 2023 a costly investment plan including the installation of electric arc furnaces (EAF) instead of high- coal-fired stoves, to reduce its carbon footprint.
Joe Biden’s major climate plan, in force since the summer of 2022, should ultimately lead to a reduction in the cost price of American steel and therefore make it very competitive compared to European steel, indicated in August to AFP a source in the sector.
