The European Union has cleared the $14.9 billion buyout of U.S. Steel by Japan’s Nippon Steel, allaying competition concerns from a deal that has drawn political opposition in the United States.
The approval by the European Commission was expected to be a formality, but the deal is facing resistance from several U.S. lawmakers and the United Steelworkers union, who are concerned about national security and potential job losses.
While U.S. President Joe Biden has said Pennsylvania-based U.S. Steel should remain domestically owned, Republican front runner for the presidential race, Donald Trump, said he would block the deal if elected.
Nippon has tried to address the concerns by offering to move its U.S. headquarters to Pittsburgh, where U.S. Steel is based, and by promising to honor all agreements in place between U.S. Steel and the United Steelworkers.
The acquisition of U.S. Steel will help Nippon, the world’s fourth-largest steel maker, move toward 100 million metric tons of global crude steel capacity. The deal was clinched in December, with Nippon prevailing over rival bidders such as Cleveland-Cliffs, ArcelorMittal, and Nucor.
Despite the mounting opposition, an overwhelming majority of U.S. Steel shareholders voted in favor of the deal in April. The company now expects the deal to close in the second half of 2024, compared to its prior deadline of the second to third quarter.
The European Commission said it cleared the deal given the companies’ “limited market positions resulting from the proposed transaction”. Shares of U.S. Steel rose 2% in morning trade, but they have lost a quarter of their value so far this year.