As President Joe Biden prepares to block the deal between Nippon Steel Corp (OTC:NPSCY) and United States Steel (NYSE:X), the head of United Steelworkers says that the Japanese steelmaker needs to rework its deal and suggested American company’s board to replace the CEO to win the union's support.
What Happened: David McCall, President of United Steelworkers met Nippon Steel’s Executive Vice President Takahiro Mori this summer to describe the union’s demands, particularly ensuring that the Japanese steelmaker’s parent sign the deal. McCall said this on Thursday in an interview with Bloomberg.
"Get a decent CEO into that company and let's continue to make steel," McCall said criticizing U.S. Steel CEO David Burritt. "His board's got to look at him really close.
Earlier this week McCall blasted U.S. Steel CEO Burritt for expressing skepticism that U.S. Steel’s deal failure could lead to closing some facilities and moving headquarters out of Pittsburgh. McCall called it, “one of the most irresponsible, baseless,” threats.
McCall cautioned that he does not think the company should be divided among more than one buyer. While other bidders have been linked to interest in U.S. Steel’s blast furnaces, the Japanese steelmaker was first drawn to the company’s Big River complex.
"For national security purposes and critical supply chain issues, we need to melt, pour, and finish steel in this country," the union’s president said.
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Why It’s Important: On Thursday, the Biden administration intended to block Nippon Steel’s $14.9-billion acquisition of the American company. This has been referred to as a national security concern by President Biden, who is reportedly awaiting the results of a Treasury review that would grant him power to execute the restriction.
The companies reportedly responded by echoing U.S. Steel's public concerns, stating that rejection of the transaction could lead to the idling of U.S. Steel's blast furnace facilities, potential job losses, and a weakening of the steel supply to U.S. industries.
The deal has faced opposition from both Democrats and Republicans, including Vice President Kamala Harris and Donald Trump, who have voiced their desire for U.S. Steel to remain "American owned and operated."
Nippon Steel earlier pledged an additional $1.3 billion investment in two U.S. Steel plants to garner support for its acquisition bid, which was facing resistance from U.S. unions and politicians.
Price Action: United States Steel stock last tarded at $29.97, up 2.1% in the regular trading session on Thursday, The stock gained a further 2.24% in after-hours trading. However, the American steelmaker’s stock is down 37.51% year to date, according to data from Benzinga Pro.
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