Nippon Pushes to Reach a Deal
In the latest updates from March, discussions between the United Steelworkers (USW) labor union and representatives of Nippon Steel Corp., the potential purchaser of United States Steel Corp., are underway.
According to information received directly from an executive at Nippon Steel, the Japanese corporation is actively pursuing a discussion with USW representatives in an attempt to secure an approval of the deal before September ends.
Nippon Steel and U.S. Steel unveiled their plans for a merger last December, but following the news, several elected representatives in the United States voiced their opposition over the purchase, citing national security as a primary concern. This skepticism arose even despite the long-standing diplomatic relationship between Japan and the United States, which dates back to 1946.
Cleveland-Cliffs also Expresses Interest
Before Nippon Steel made its announcement, Cleveland-Cliffs had openly confirmed its interest in acquiring U.S. Steel. The CEO of Cleveland-Cliffs, Lourenco Goncalves, emphasized that the support of the USW should play a key role in determining the winning bid.
“The USW has affirmed in writing to Cliffs that it endorses the transaction and will not exercise this right. Furthermore, the USW has also stated that it will not endorse anyone other than Cliffs for a transaction,” Cleveland-Cliffs wrote.
As a response to the formal assignment letter from USW International, Goncalves stated, “I want to thank [USW President] Tom Conway for working as a true partner with me. I also want to say to the employees of U.S. Steel who are watching this all unfold: I have your back.”
In the correspondence from Conway to Goncalves, it also notes, “The Union’s Basic Labor Agreement with U.S. Steel includes [the] right to transfer or assign its rights to another person or entity. By this letter, the Union transfers and assigns to Cleveland-Cliffs the Union’s Right to Bid. The Union’s transfer and assignment only applies to Cleveland-Cliffs.”
A “14.9 Billion Dollar Purchase”
Despite the possibilities of the potential Nippon Steel and U.S. Steel merger, critics were also quick to raise concerns about consolidating all blast furnace/basic oxygen furnace steel mills in the U.S. under one company. Many buyers fear that a merger of the two firms could lead to a monopoly within the industry.
Reuters reports that it’s “Nippon Steel’s turn” to be granted approval by the USW, which would pave the way for the world’s fourth-largest steel producer to, “carry the $14.9 billion purchase of its U.S. rival over the line.”
In an even earlier interview with Reuters, an executive from Nippon Steel indicated that the company had resolved contractual issues with the union. He explained that the focus has now shifted towards engaging in “heart-to-heart talks” to address any issues related to job stability and the operational success of various facilities.
Yuka Obayashi and Ritsuko Shimizu from Reuters highlighted Nippon Steel’s efforts to advance negotiations with the USW in preparation for a crucial shareholder vote on the proposed merger with U.S. Steel scheduled for mid April.
The company looks to complete the transaction sometime between June and September, according to Reuters.
