Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Nippon Steel has vowed to push ahead with its $14.9bn acquisition of US Steel, predicting “calmer discussions” with unions after the country’s presidential election in November.
Speaking at the Japanese company’s full-year results, chair Takahiro Mori acknowledged that the deal had become heavily politicised but said there were currently no plans to make additional concessions to the steelworkers’ unions.
The company said in its earnings summary that there will be no job cuts and plant closures caused by the merger and that it will move its own US headquarters to Pittsburgh from Houston.
“President Biden and the union are saying all kinds of things. Basically, they are concerned about job security and national security. But the acquisition we are making is intended to make US Steel stronger,” said Mori on Thursday.
Earlier this week, the European Union cleared the deal to go ahead. However, US lawmakers have also recently stepped up their antitrust review, which Nippon Steel said would push back the completion of the acquisition to the “third or fourth quarter” of the year.
The attempted takeover of the Pittsburgh-based steelmaker in December sparked a bipartisan political backlash, with both President Joe Biden and Donald Trump trying to court blue-collar voters in the critical swing state of Pennsylvania.
After Trump lashed out against the “horrible” deal and vowed to block it if he was elected, Joe Biden also declared his opposition to the takeover saying it was “vital” for the American steel company to remain “domestically owned and operated”.
“It is hard to imagine it becoming more politicised, and since it will not be political beyond the presidential election, I think there is a possibility of a calmer discussion once the political leverage of the USW [United Steelworkers union] is gone. So my determination to close [the deal] as soon as possible has not changed,” said Mori.
He also dismissed the likelihood of another bidder swooping in because the deal was approved by US Steel shareholders in April. “It is basically impossible for others to buy it,” said Mori.
The comments from Nippon Steel’s top management came as the company announced its results for the full financial year ending in March 2024.
Net profit at Japan’s largest steelmaker was Y549.4bn ($3.53bn), down 20.8 per cent from the previous year, as inflation in the cost of raw materials and rising Chinese exports continued to squeeze margins.
Although the decline in profits was less severe than analysts expected, the company said steel demand fell to “an unprecedented dire level” in the second half of fiscal 2023, as the sluggish Chinese economy and worsening economic sentiment in the US and Europe weighed on the market.
