Japan’s Nippon Steel has announced an extension of the closing date for its $14.9 billion acquisition of U.S. Steel, shifting the timeline from late 2024 to the first quarter of 2025. This decision comes as U.S. President Joe Biden deliberates on whether to block the deal, which has faced significant opposition since its announcement.
Key Details:
Revised Timeline:
The closing date has been pushed back to accommodate the ongoing review process, allowing more time for evaluation.
Background on the Deal:
Nippon Steel acquired U.S. Steel in an auction last December, paying a substantial premium. However, the deal has encountered resistance from the United Steelworkers union (USW) and various political figures.
Biden Administration’s Position:
President Biden has expressed a preference for U.S. Steel to remain domestically owned and operated. The decision on the merger has been referred to him by the committee that reviews foreign investments for security concerns. He has 15 days to make a decision, after which inaction could lead to automatic approval.
Corporate Statements:
Nippon Steel stated its hope that the President will conduct a fair evaluation of the acquisition, emphasizing confidence that the deal will benefit U.S. Steel.
Market Reaction:
Shares of U.S. Steel rose 1.7% prior to market opening, although they have not reached the offered price of $55 per share, reflecting investor uncertainty about the deal’s future.
Political Advocacy:
Japanese Prime Minister Shigeru Ishiba has urged Biden to approve the merger, emphasizing the importance of maintaining strong U.S.-Japan relations.
Regulatory Review:
The U.S. Department of Justice’s antitrust division is currently reviewing the acquisition, although no timeline for completion has been provided.
Shareholder Support:
Despite the opposition, U.S. Steel shareholders voted overwhelmingly in favor of the acquisition in April. Nippon Steel has proposed relocating its U.S. headquarters to Pittsburgh, where U.S. Steel is based, and has committed to honoring existing agreements with the USW.