A US Steel site in North Braddock, January 21, 2020 in Pennsylvania (AFP/Archives/Brendan Smialowski)
The takeover of the American steelmaker US Steel by the Japanese Nippon Steel, for nearly $15 billion, hit a major obstacle on Thursday: President Joe Biden, campaigning for a second term, opposes it on behalf of of the defense of American “workers”.
“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 is important that we maintain strong American steel companies, operated by American workers,” he added.
Concern is particularly strong in Pennsylvania (north-east), the state in which US Steel’s headquarters are located and which will be decisive in the presidential election in November.
The two groups reacted in a joint statement, claiming to have “confidence in the fact that (their) partnership (would be) a success” for employment and the supply chain in the United States, “while strengthening the competitiveness of the U.S. economy and forging 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”.
– “National security” –
“We will continue to defend this operation and are confident that an impartial and thoughtful review will result in its approval,” they concluded.
US Steel shares ended Thursday down 3.36% on the New York Stock Exchange.
A Nippon Steel site, February 16, 2024 in Kitakyushu, Japan (AFP/Archives/Philip FONG)
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.
“The alliance with Japan is stronger than ever,” said John Kirby, spokesperson for the National Security Council, on Thursday. “We look forward to this visit.”
For Thibault Denamiel, of the Center for International and Strategic Studies (CSIS), “it would be understandable” if Tokyo “is upset by the lack of reciprocal support” because of “internal political pressures”.
Joe Biden, who presents himself as a defender of American industry, had already worried about “national security” and the “reliability” of steel supplies when the marriage was announced in December.
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 swing the vote to one camp or the other, notes Thibault Denamiel.
Union and political protests have multiplied.
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, ban, green light under conditions).
US Steel launched a strategic review in August 2023 after receiving several unsolicited offers for a partial or total buyout.
– “Unfailing support” –
The company had rejected, at the time, an offer from its American competitor Cleveland-Cliffs (CLF), which wanted a total union to form the only American steelmaker in the Top 10 in the world in terms of production volume (31 million tonnes).
A US Steel site in North Braddock, October 27, 2022 in Pennsylvania (AFP/Archives/Branden EASTWOOD)
This offer was validated by the USW metalworkers’ union, which even stated that it would not support anyone else.
The union now “welcomes” Joe Biden’s statement, said David McCall, international president.
According to him, the ownership of US Steel by a foreign group would make American defense and crucial infrastructure “vulnerable”.
“The president’s statements should put an end to the debate,” he said, saying he was “grateful” to Joe Biden “for his unfailing support”.
According to the White House, the latter telephoned Mr. McCall on Thursday morning to assure him that the steelworkers could count on him.
Asked by AFP, CLF did not react.
His boss Lourenco Goncalves indicated to the Bloomberg agency that he could consider a new offer, with the support of the USW, but at a price much lower than that of the Japanese.
For Matthew Miller, analyst at CFRA Research, the risk of such an operation in an election year was high.
“It is very surprising and disappointing that US Steel ignored the risks” by opting for Nippon Steel instead of CLF, whose offer was “very close” at $54 per share, he said.
The Japanese giant plans to pay $55 per share, or $14.9 billion in total (debt included). Finalization was expected, at the latest, in the third quarter of 2024.
US Steel’s appeal 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 instead of coal-fired blast furnaces. , to reduce its carbon footprint.
© 2024 AFP
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