Acquisition Facing Bipartisan Obstacle

Nippon Steel announced that it would promote the bid for acquisition of US Steel, which had been agreed with each other last December. To the bid, the front runner in Republican primary for the Presidential election this fall, Donald Trump, has referred to his opposition in his campaign. Nippon Steel showed its firm determination to expand its business in the world.

Nippon Steel released its decision in mid-December that it would acquire whole share of US Steel with the cost of ¥2 trillion ($14.1 billion) and make the company wholly-owned subsidiary. Nippon Steel explained the reason of acquisition as establishing a posture of producing 100 million tons of crude steel in the world. It estimates that the market of United States has a potential to grow further with positive demands. The company hopes to enhance its status as a global corporation with new base in US, adding to India and Southeast Asia.

 

It was unlikely for Trump to miss that opportunity for appealing his slogan, “Make America Great Again,” to the voters. After a meeting with a labor union in Washington DC, which represented workers in the transportation industry, Trump expressed his intention to block that deal immediately. “We saved the steel industry,” said Trump, “Now, US Steel is being bought by Japan. So terrible.”

 

Reaching workers in industries is not only a campaign strategy of the Republicans, but Democrats. The president of steelworker’s labor union announced that it had received from President Joe Biden a personal assurance that he would back them. Biden administration is taking serious scrutiny on Nippon Steel’s purchase of US Steel. Nippon Steel is facing bipartisan efforts against the acquisition of an iconic steel company of US.

 

Nippon Steel insists that its purchase of US Steel has merits for both Japan and US. “As far as I know,” said Vice-president Takahiro Mori in a press conference, “America upholds freedom and equality, or law and order. It cannot be blocked only by political consideration.” Mori stressed that the responses from US were within the expectations of the company and it would continue its effort for implementing the deal.

 

The first hurdle for Nippon Steel will be the general meeting of US Steel’s shareholders scheduled in March. Nippon Steel needs to achieve understandings on the acquisition plan. The greatest obstacle is passing the examination of the Committee on Foreign Investment in the United States (CFIUS). If Nippon Steel fails in getting approval of CFIUS, it may have to pay US Steel for the penalty.

 

Nippon Steel has optimistic expectation that the political opposition will be ceased when it finds a consensus with the workers’ union. However, political arguments in US will eventually be enhanced as the presidential election is getting closer. There is a growing discussion in Japan on the negative impact of Trump, if he returns to the White House. If the deal is blocked in the political struggle in US, it will be recognized as one of the early impacts of Trump’s presidential bid.

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