Yuka Obayashi, Katya Golubkova and Ritsuko Shimizu
TOKYO (Reuters) – Nippon Steel’s vice chairman plans to return to the United States this week for further talks on the proposed acquisition of US Steel and will explore the possibility of selling some assets if necessary to make the deal go through.
The visit by Vice President Takahiro Mori shortly after the May 20-26 trip underscores Nippon Steel’s efforts to close the deal amid growing scrutiny from regulators and political opposition. That includes opposition from President Joe Biden, who wants US Steel to remain domestically owned, as well as opposition from the powerful United Steelworkers (USW) union over fears of job losses.
The transaction will provide Nippon Steel with greater access to the lucrative US market and support its long-term financial goals.
The two steelmakers said last month they had received all regulatory approvals outside the United States for their proposed $14.9 billion merger, a step toward finalizing the controversial deal.
In an interview on May 30, Mori said he would return to the United States this week for further talks, including in Washington. It follows his May 20-26 trip to meet with business and political leaders, including four U.S. senators, as well as community leaders in Pennsylvania, where US Steel is based.
Mori said Nippon Steel may consider selling some assets if required by U.S. regulators to approve the deal.
“If the US authorities tell me: you have to do this or this deal cannot be allowed to happen, then we should seriously look into it,” he said.
The Calvert, Alabama, manufacturing plant, jointly owned by Nippon Steel and Luxembourg-based ArcelorMittal (NYSE:), is at the center of antitrust concerns from US authorities, Politico reported in March.
However, Mori downplayed the likelihood of an asset sale, saying: “I don’t think it’s necessary to close the deal.”
During a May visit, Mori said he pointed to the 2011 takeover of U.S. Standard Steel by Sumitomo Metal Industries, now part of Nippon Steel, as an example of what he hopes the U.S. Steel purchase could achieve.
Standard became profitable in 2013 after that deal and continues to survive by transferring technology and sending highly skilled engineers from Japan, he said.
OPERATION SAFETY
Nippon Steel sought to address the workplace safety concerns raised by the USW by committing to comply with all agreements in force between US Steel and the union. They also promise to invest an additional $1.4 billion in the modernization of US steel mills.
However, a number of Mori’s requests to meet with the USW chief since their last meeting in March have not been accepted, he said.
“USW says our proposals are not good enough, but it is not clear what exactly is not good enough,” Mori said, citing the need for a face-to-face meeting. “We are always open to communication.”
The world’s No. 4 steelmaker wants to persuade public opinion to back the deal, hoping it might push the union to the negotiating table, Mori said, adding that his confidence in the deal’s success was “getting stronger.”
In an email to Reuters, USW called Nippon Steel’s proposals “empty promises.”
“USW has already expressed its deep and ongoing concerns about the proposed sale and agrees with President Biden and others who have called for US Steel to remain domestically owned and operated,” it said.
Mori believes the takeover process is likely to go more smoothly after the US presidential election, since the deal will no longer be a political issue.
If completed by the end of December as planned, the deal should boost Nippon Steel’s annual profit by 150 billion yen ($954 million) or more, helping it meet its long-term goal of hitting 1 trillion yen in profit in fiscal 2025. – said Mori.
($1 = 157.2000 yen)