December 3, 2024

MediaBizNet

Complete Australian News World

Joe Biden is set to express his concerns about Nippon Steel's takeover of US Steel

Joe Biden is set to express his concerns about Nippon Steel's takeover of US Steel

Joe Biden plans to intervene in Nippon Steel's proposed purchase of US Steel, a move that could threaten the deal and anger Japan, one of Washington's closest allies.

Biden is scheduled to issue a statement expressing serious concern about the Japanese group's proposed $14.9 billion takeover of the Pennsylvania-based steelmaker before Prime Minister Fumio Kishida arrives for a state visit to Washington on April 10, according to Six. People familiar with the decision.

US officials and lawyers drafted the statement, and the White House notified the Japanese government privately of the president's decision, according to people familiar with the matter. US Steel shares fell more than 12 percent after the Financial Times published details of Biden's intentions.

The expression of concern will be interpreted as opposition to the takeover and represents the culmination of months of debate in the White House over how to respond to the deal that has sparked a bipartisan backlash in Washington against the sale of the American manufacturing icon to a foreign group.

Although US law gives the administration the authority to block certain foreign acquisitions on national security grounds, Biden would not explicitly say the deal should be blocked, according to people familiar with the matter.

Instead, they say he will issue comments similar to statements made in December by White House national economic adviser Lael Brainard, who said the president believed the deal deserved “serious scrutiny.”

Pennsylvania is a decisive swing state in this year's presidential elections between Biden and Donald Trump. The two men sought union votes in the state, and Trump has already criticized Nippon Steel's “terrible” deal to buy the American producer based in Pittsburgh.

READ  The best cryptoanalyst predicts an imminent short squeeze on Bitcoin (BTC) - that's their goal

The United Steelworkers union, also based in Pittsburgh, opposed the takeover.

Nippon Steel announced the controversial takeover in December, prompting Biden to choose sides between a powerful union and its voters, and a crucial American ally. The president has invested heavily in strengthening alliances, especially with Japan.

The White House asked US Ambassador to Japan Rahm Emanuel to solve the problem, putting him in a difficult position after he publicly welcomed the agreement and described it as “historic.” Emanuel did not respond to a request for comment.

One person familiar with the deliberations said it was “embarrassing” for an administration that speaks of the importance of allies, especially the U.S.-Japan alliance, to “send a signal of distrust regarding Japanese ownership of U.S. companies” as Kishida prepares for the visit.

“The president knows all this, but unfortunately it seems that politics in an election year will win,” this person said.

The timing of Biden's statement is important because Nippon Steel last week submitted its proposal to the Committee on Foreign Investment in the United States (Cfius), an interagency panel that screens incoming investments for national security risks, according to two people familiar with the move. . The company declined to confirm the Cfius file.

“It is unprecedented for a president to make a substantive comment on a case pending before Cfius,” said Evan Schlager, a partner at Kirkland & Ellis and one of the most prominent CFIUS lawyers in the United States.

“While CFIUS is typically immune to political pressure, this case involves distinct assets with unique capabilities coupled with an administration that has made protecting manufacturing and middle-class jobs the foundation of its foreign policy.”

READ  Asia Markets Rise as Oil Prices Surging After Surprising OPEC+ Cut; Investors are absorbing factory data

The White House declined to comment on whether the president would intervene. The Japanese Prime Minister's Office also declined to comment.

News of Biden's planned statement comes as he tours swing states like Pennsylvania in an attempt to boost votes ahead of the election in November.

United Steelworkers President David McCaul said last month that his union “received personal assurances that Biden supports us” regarding the deal. Trump also vowed to block the deal if he beats Biden in November.

Nippon Steel has appointed American lobbying firm Akin Gump to focus its energy on winning the support of the United Steelworkers Union.

But for confidentiality reasons, the Japanese group had no contact with the union before announcing the deal, and did not sign a non-disclosure agreement with the group, which represents 850,000 American manufacturing workers, until late February. Experts in Washington said that the company made a grave mistake by not concluding a deal with the union before announcing the deal.

After talks with Nippon Steel last week, United Steelworkers said the meeting resulted in “no progress.” “We remain convinced that the company does not fully understand its obligations to steelworkers, retirees and our communities,” she said in a letter to her members.

Nippon Steel said in response that it would continue talks with the union. “We have provided the USW with specific commitments that we believe address all of the union concerns raised,” the statement read.

A person familiar with Nippon Steel's thinking said the company does not plan to abandon its bid for US Steel even if Biden publicly expresses opposition to the takeover.

READ  Lucid Air Grand Touring Performance debuts with 1,050 horsepower and 446 miles of range

The group does not expect any political interference once the CFIUS review begins, an executive told analysts at an earnings conference last month.

The Japanese business community was shocked by the strong reaction in Washington to the deal, especially since the United States remains the most attractive market for mergers and acquisitions for Japanese companies.

Nancy McLernon, president of the Global Business Alliance, a trade group that represents foreign multinational companies in the United States, said there is “significant risk” in blocking the takeover for anything other than national security reasons.

“It will have a material impact on the relationship with an important ally. It is worth noting that Japan is the largest foreign investor in the United States, directly employing nearly one million American workers. Blocking the deal under this pretext would almost certainly lead to an awkward state dinner in April.