Nippon Steel and US Steel have expressed their disappointment over the US Government’s decision to block their proposed acquisition deal.
The US adminstration blocked Nippon Steel’s $14.9bn (Y2.33trn) US Steel acquisition over national security concerns.
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The companies argue that the deal would have revitalised US steel communities, secured jobs and bolstered national security. The companies claim that the decision was politically motivated and did not consider the transaction’s merits.
They emphasised the deal’s potential to revitalise communities in Pennsylvania and Indiana, provide job security for US steelworkers, enhance the supply chain and compete effectively against China.
The companies highlighted their commitment to invest more than $2.7bn, including sums to extend the life of US Steel’s Mon Valley Works and Gary Works facilities.
Additionally, the companies stated that they engaged with the Committee on Foreign Investment in the United States (CFIUS) transparently and diligently. They believe the transaction would strengthen US security, contrary to the decision.
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By GlobalDataThey criticised the CFIUS process as being “deeply corrupted by politics” and claimed the rejection was pre-determined to meet political objectives, treating Japan, a US ally, unfairly and sending a negative message to potential investors.
To address potential CFIUS concerns, Nippon Steel had proposed mitigation measures including a US-majority board for US Steel, independent directors approved by CFIUS and key executive positions held by US citizens.
The companies in a statement said: “We are dismayed by President Biden’s decision to block Nippon Steel’s acquisition of U.S. Steel, which reflects a clear violation of due process and the law governing CFIUS. Instead of abiding by the law, the process was manipulated to advance President Biden’s political agenda.
“The President’s statement and Order do not present any credible evidence of a national security issue, making clear that this was a political decision. Following President Biden’s decision, we are left with no choice but to take all appropriate action to protect our legal rights.
“In short, we believe that President Biden has sacrificed the future of American steelworkers for his own political agenda. We are committed to taking all appropriate action to protect our legal rights to allow us to deliver the agreed upon value of $55 per share for U.S. Steel’s stockholders upon closing.”
They also offered to restrict Nippon Steel’s involvement in trade measures, prevent job transfers outside the US and maintain production capacity for ten years. Despite these offers, the companies assert that CFIUS did not consider any of the mitigation proposals, as evidenced by the lack of written feedback on the national security agreements they had proactively presented.
The released statement adds: “We would like to express our sincere gratitude to the wide range of stakeholders in the United States and Japan, including U.S. Steel employees, local business and community members, government officials and elected officials for their tremendous cooperation and enthusiastic support for this transaction. We will never give up on pursuing business in the U.S. for the benefit of the U.S. domestic stakeholders.
“We continue to believe that a partnership between Nippon Steel and U. S. Steel is the best way to ensure that U.S. Steel, and particularly its USW (Unitedd Steelworkers)-represented facilities, will be able to compete and thrive well into the future – and we will work closely with stakeholders, including government officials from Japan and allies and partners in the U.S., to take all appropriate action to protect our legal rights and secure that future.”
