United States Steel Corp. has seen its stock soar this year following reports from The Washington Post indicating President Joe Biden will not rush to block Nippon Steel Corp.’s proposed takeover bid. While it's known Biden is not fond of the deal, it appears any decision on whether to veto the takeover might not come until after the 2024 presidential election, as sources close to the matter have revealed.
According to reports, U.S. Steel shares jumped as much as 10% at one point, marking the most significant intraday rise since December 18, the day the deal was first put on the table. By 12:25 p.m. New York time, shares had slightly lessened but still reported gains of about 8.8%. This market reaction reflects the uncertainty surrounding the administration’s timeline for making any definitive call on the future of this $14.1 billion bid.
White House spokeswoman Saloni Sharma was quick to refute the notion of any imminent announcements, insisting, “The President’s position is clear: it is imperative for U.S. Steel to remain American-owned.” She elaborated by pointing out there hasn’t yet been any recommendation from the Committee on Foreign Investment in the United States, often referred to as CFIUS, which advises the President on foreign acquisition risks to national security.
Currently, CFIUS is expected to provide its recommendations by September 23. If there's any extension to this deadline, it could mean Biden’s decision wouldn’t come before the election, with speculation rising around how this might influence voters.
Biden's administration has relatively strong ties to labor unions, and the President has repeatedly assured steelworkers of his support. Sharma emphasized, “The President told our steelworkers he has their backs, and he meant it.” This sentiment is echoed not just by Biden but also reflected strongly among labor groups.
Meanwhile, Nippon Steel and U.S. Steel are engaged in last-ditch efforts to sway public opinion and win over both workers and political figures to support the acquisition. Recently, the two companies released their communications with the United Steelworkers (USW) union to counter claims from union leaders who dismissed proposals to negotiate the deal.
The urgency of these efforts may be heightened by alarming warnings from U.S. Steel officials about potential plant closures if the acquisition fails. Some employees have begun voicing support for Nippon Steel as management asserts the deal includes $2.7 billion of prospective investments aimed at bolstering workers' benefits, aiding local communities, and enhancing national security.
Nonetheless, the USW has issued its own memo, adamant about the union's resistance to foreign ownership, labelling the acquisition as “doomed.” The union’s steadfast position could pose significant hurdles for the bidders as they try to rally enough support to navigate regulatory scrutiny.
The dynamic between these companies, the Biden administration, and the labor force creates a complex atmosphere surrounding the proposed acquisition, aligning interests of national reputation against competitive corporate aspirations to remain leaders within the industry. How these variables interact as we approach the election could change the direction of steel manufacturing—and beyond well past the presidential polls.
Stakeholders are keeping close tabs on the situation, as whatever turns the Biden administration takes next will ripple through financial markets, labor unions, and other industries reliant on steel production. The balance between foreign investment interests and domestic labor needs is teetering, and this pending decision has the potential to impact not just business strategies, but the livelihoods of countless workers across the country.
