US Steel Shareholders Approve Nippon Buyout Despite Biden Opposition

Nippon Steel said there would be ‘no layoffs or plant closures’ as a result of the transaction.
US Steel Shareholders Approve Nippon Buyout Despite Biden Opposition
A worker leaves U.S. Steel Edgar Thomson Steel Works in Braddock, Pa., on March 10, 2018. (Drew Angerer/Getty Images)
Aldgra Fredly
4/13/2024
Updated:
4/14/2024
0:00

U.S. Steel shareholders have overwhelmingly approved Nippon Steel Corp.’s proposed $14.9 billion acquisition of the firm, pushing forward with the merger despite opposition from the Biden administration.

More than 98 percent of the votes cast were in favor of the merger deal with the Japanese firm, representing 71 percent of the outstanding U.S. Steel stock as of the record date, according to the company.

“The overwhelming support from our stockholders is a clear endorsement that they recognize the compelling rationale for our transaction with NSC,” U.S. Steel CEO David Burritt said in a statement.

“This is an important milestone as we progress toward completing the transaction,” he added.

In a separate statement, Nippon Steel said the merger deal will help to “protect and grow U.S. Steel” and bring “significant benefits” to its stakeholders, customers, employees, union workers, and suppliers.

The Japan-based company promised that there would be “no layoffs or plant closures” as a result of the transaction.

Nippon Steel also has agreed to keep U.S. Steel’s name and headquarters in Pittsburgh, but it would become a wholly owned subsidiary of Nippon Steel under the terms of the sale.

“We look forward to collaborating closely with U.S. Steel to move forward together as the ‘Best Steelmaker with World-Leading Capabilities,’” Nippon Steel Vice Chairman Takahiro Mori stated.

Nippon Steel won the race for U.S. Steel over rivals Cleveland-Cliffs, ArcelorMittal, and Nucor. The companies have said they expect to close the deal in the second or third quarter of this year.

Concerns Surrounding Merger Deal

U.S. Steel first announced the proposed merger deal in December 2023, sparking strong opposition from President Joe Biden and several other politicians, who raised concerns about national security.

The company plays a major role in national security, as steel is the main material used in building ships, airplanes, ammunition, and firearms.

Sen. John Fetterman (D-Pa.), who lives across the street from U.S. Steel’s Edgar Thomson plant in Braddock, has been outspoken about the sale from the beginning.

“As I’ve always said, steel is about security—both our national security and the economic security of workers and steel communities in Pennsylvania and across the country,” he said in a statement after the vote.

“This conversation should be about the steelworkers who power U.S. Steel.”

Mr. Fetterman said that he’s encouraged to see Nippon’s commitment to preserving jobs and investing in Pennsylvania but that these efforts are not enough to change his stance on the matter.

“They are coming to the table with these real commitments because the steelworkers and USW [United Steelworkers union] are putting their feet to the fire. But it’s still not enough—that’s why I will continue to stand firm behind them to protect Pennsylvania jobs,” he said.

Last month, President Biden came out in clear opposition to the proposed deal, saying it is important for the United States to maintain “strong American steel companies powered by American steel workers.”
“I told our steel workers I have their backs, and I meant it,” he said in a March 14 statement. “U.S. 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.”

Nippon’s Alleged Ties to China

Meanwhile, the chair of the Senate Banking Committee has urged President Biden to probe into Nippon Steel’s alleged ties to China amid growing bipartisan opposition to the proposed merger deal.
In a letter dated April 1 to President Biden, Sen. Sherrod Brown (D-Ohio) raised concerns over a consultancy report highlighting that the deal might undermine U.S. economic and national security.

“Nippon’s connection to the Chinese steel ecosystem and industrial policy agenda has concerning implications regarding ties to China’s military-civil fusion strategy and [the] quest for global economic power,” Mr. Brown said.

“It is also imperative that Nippon’s relationship with and exposure to the Chinese steel industry is thoroughly examined as well.”

Nippon Steel has said that the report was “rife with inaccuracies and misrepresentations” and that its operations in China were “very limited,” representing less than 5 percent of its global production capacity.

Beth Brelje, Aaron Pan, and Reuters contributed to this report.