NIPPON Steel clarified its spending plans at US mills owned by US Steel as part of last-ditch efforts to win over workers and politicians for its bid to buy the Pittsburgh-based steelmaker.
After meeting with United Steelworkers leaders, the Japanese firm released a letter to US Steel staff on Monday (Dec 9). In it, the Japanese firm said it made new commitments with regards to where and when a previously announced US$1.4 billion would be spent. The figure does not include maintenance or depreciation, Nippon said.
The latest letter indicates there had been at least some interaction between the parties in recent weeks, with Nippon Steel saying the USW asked for further details about its capital expenditure plans. It’s unclear that this letter will change USW leadership’s long-held official stance of opposing the deal, but it does suggest the Japanese buyer is racing to do anything possible to get approval from the influential union before a federal review is concluded on whether to approve the US$14.1 billion takeover.
“During our recent discussions with the USW leadership, we listened carefully to the USW’s requests for further details on our future plans,” Nippon Steel said, adding that after those talks it sent an additional commitment letter to USW president David McCall on Dec 2 “addressing all the concerns raised.”
The Japanese steelmaker said it released the letter after “constructive dialogue” with Pennsylvania governor Josh Shapiro and others, signalling that the Democrat governor – who has not taken a public position on acquisition – is involved in ongoing talks. Collapse of the deal would renew questions about the future of steelmaking in Pennsylvania, where the political outcry has been concentrated.
“While the final decision on this proposed deal will ultimately be made by the White House alone, the governor will continue to be actively engaged in this process,” a spokesman for Shapiro’s office said on Monday in a message to Bloomberg.
Nippon Steel’s letter also makes the previously announced US$1.3 billion in additional capital expenditures legally binding. That money had been promised after an arbitration meeting. Nippon Steel is seeking to allay concerns over job security at plants that use traditional blast-furnace production from iron ore as part of its pending transaction.
Both President Joe Biden and President-elect Donald Trump have publicly opposed the deal, which was announced a year ago and remains before federal regulators including a review by the Committee on Foreign Investment in the US, or Cfius. The USW did not respond to a request for comment.
US Steel shares rose as much as 3.1 per cent to US$39.64 a share Monday in New York, edging closer to Nippon Steel’s US$55-a-share offer price. Nippon Steel shares fell as much as 0.6 per cent. BLOOMBERG
