Posted by: Aathrei Dasgupta
(Reuters) – U.S. Steel shareholders on Friday approved a $14.9 billion bid to acquire Japan’s Nippon Steel as expected, bringing the merger a step closer to completion even as political opposition to the deal grew.
U.S. Steel said more than 98% of voters voted in favor of the deal, which would see Nippon pay $55 a share, an amount that represented a huge premium when the takeover was announced in December.
However, several US lawmakers have since opposed the agreement, citing national security concerns. President Joe Biden has said US Steel must remain a domestically owned American firm.
US Steel shares closed 2.1% lower at $41.33 on Friday, well below Nippon Steel’s $55 per share offer, reflecting uncertainty about whether the deal will receive regulatory approval.
The deal has drawn sharp criticism from the United Steelworkers (USW), which is concerned about possible job cuts.
“We are not surprised that shareholders decided to cash in and sell the employees and retirees of an iconic American company,” USW said in response to the vote.
Regulators are also scrutinizing the deal. The Committee on Foreign Investment in the United States (CFIUS), a powerful group that reviews foreign investment in American companies, met with the parties to discuss the deal, Reuters reported.
The US Department of Justice has launched an in-depth antitrust investigation into the takeover, Politico reported on Wednesday.
Nippon promised not to cut jobs as a result of the deal, to comply with all agreements between the union and US Steel, and to move its US headquarters to Pittsburgh, where US Steel is based.
In a statement, the Japanese steel company said it was “confident” that the acquisition would “protect and strengthen US Steel and bring significant benefits to its shareholders … as well as the US steel industry and the United States as a whole.”
“We look forward to working closely with US Steel to move forward together as the ‘best steelmaker with world-leading capabilities,’” said Vice Chairman Takahiro Mori.
Friday’s vote “represents an important step,” the company said.
Nippon Steel won the race for US Steel against rivals Cleveland-Cliffs (NYSE:), ArcelorMittal (NYSE:) and Nukor (New York Stock Exchange:).
The deal is expected to close in the second or third quarter of this year, the companies previously said.
Bloomberg News reported Friday, citing people familiar with the situation, that both steel companies are expected to announce they now expect the deal to close in the second half of 2024.