Lobbying commences for Nippon acquisition of US Steel

Nippon Steel confirms to Kallanish that its executives have met with members of the US Congress to promote the Japanese company’s proposed acquisition of US Steel (USS).

A Nippon Steel spokesperson in Japan on Thursday tells Kallanish that meetings with individual members of Congress have taken place over the past few business days. The sessions were meant to “discuss how this acquisition will be beneficial to all stakeholders, including American industry and workers,” the spokesperson says without commenting further.

According to news reports, among the lawmakers whom Nippon visited was Senator John Fetterman, a Democrat from Pennsylvania. Fetterman had aggressively criticized the prospective merger, calling it “absolutely outrageous” that Pittsburgh, Pennsylvania-based US Steel would sell to a foreign company (see Kallanish 20 December).

The Nippon visits on Capitol Hill mark the beginning of formal lobbying to convince US officials that the acquisition would be in the best interest of Americans. President Joe Biden’s administration is reviewing the offer to determine if it poses risk to national security, competition, supply chain resilience, trade flows or domestic steel jobs, suggesting that the process may take as long as one year.

Former US treasury secretary Lawrence Summers has come out strongly in favor of the Nippon-USS merger and urges the Biden’s administration to approve it.

“The result will be the infusion of more capital into the US steel industry,” Summers states during a segment on Bloomberg TV’s “Wall Street Week.”

Summers adds that he hopes the government reviews will not end up as “a cloak for protectionist pandering.” He calls Japan a “staunch ally” and therefore “there is no remotely plausible national security rationale” for blocking the deal.

The public and private lobbying comes at a time when the market is learning more about Cleveland-Cliffs’ failed offer for US Steel last year. Originally Cliffs offered $35 worth of cash and stock for each US Steel share, trading under the single-digit ticker X. Now there are reports that Cliffs later sweetened the pot with an offer that added up to as much as $54/share.

However, that bid would be much more complex for US Steel shareholders to assess, because of the combination of cash and stock and a proposal for major divestitures in an attempt to satisfy US antitrust regulators. Market participants say US Steel shareholders and customers much prefer the straightforward Nippon all-cash offer.

A midwestern flat-steel distributor calls the Cleveland-Cliffs offer “a true antitrust case” that would be highly undesirable to US Steel customers.

“Cash is superior to CLF stock!” adds that distributor, referring to Cleveland-Cliffs’ three-digit stock ticker. “USS shareholders don’t want CLF stock. … If this administration doesn’t like sandwich shop mergers, it can’t possibly support CLF and X.”

Lyndon Ding Shanghai , Kristen DiLandro USA