Nippon Steel Corp. has announced plans to invest an additional $1.3 billion in United States Steel Corp.’s facilities as part of its ongoing $14.1 billion acquisition bid, which faces significant political and union opposition. The investment will be directed towards the Mon Valley Works and Gary Works, two historic US Steel plants that use traditional blast-furnace technology.
The Mon Valley Works, where US Steel’s founder Andrew Carnegie built his first mill in the 1870s, and Gary Works are pivotal to US Steel’s operations and are traditionally unionized. By increasing investment in these plants, Nippon Steel aims to gain the support of the United Steelworkers union, which has been vocal in its opposition to the takeover.
The proposed acquisition has sparked a political controversy, with opposition from both President Joe Biden and former President Donald Trump, as well as concern from politicians across the political spectrum. The deal is also undergoing a national security review, despite Japan’s status as a close ally of the United States. The strong resistance from the United Steelworkers has intensified the political scrutiny on the transaction, especially in the context of an election year.
Amir Anvarzadeh, a Japanese equities strategist at Asymmetric Advisors Pte, noted that Nippon Steel has made significant efforts to address concerns about the takeover, including guaranteeing existing union contracts and engaging with communities where US Steel operates. The latest investment announcement is seen as a response to the union’s demand for further concessions. However, the outcome of the deal remains uncertain and is closely tied to the results of the upcoming US presidential election.
In response to the investment announcement, the United Steelworkers reaffirmed their opposition, stating: “Nippon is still trying to hide behind its North American shell company to avoid addressing its contractual obligations to retirees and our communities. The company must also address urgent concerns regarding our supply chains and national security.”
Following the announcement, Nippon Steel’s stock fell by up to 1.6% in Tokyo trading on Thursday, while the broader market remained largely unchanged.
