Although Nippon Steel recently announced plans to increase investment, its prospects for acquiring US Steel do not seem optimistic.
On September 2 local time, when attending the election campaign in the key swing state of Pennsylvania with US President Biden, US Vice President and Democratic presidential candidate Harris said that American Steel Company is "an American company with a long history, and it is vital for our country to maintain a strong American steel company". "American Steel Company should continue to be owned and operated by Americans, and I will always support American steel workers".

Election increases complexity of acquisition cases
Harris' latest statement further casts a shadow over Japan Steel's acquisition of American steel companies. Public information shows that Japan's largest steel company, Nippon Steel, announced in December last year that it planned to spend approximately $14.9 billion ($55 per share) to acquire US Steel. However, since then, opposition from the United States has been incessant. Prior to Harris, Biden, Trump, and the United Steelworkers have all expressed their opposition positions.
In March of this year, in order to successfully acquire the US steel company, Nippon Steel decided to invest an additional $1.4 billion on top of its previous investment. On August 29th, it announced that it would add an additional $1.3 billion.
What are the attitudes of the two companies involved in the acquisition case amidst opposition in the US market?
On September 2nd, US Steel released a statement stating that it remains "committed to the deal with Nippon Steel, which is the best for our employees, shareholders, community, and customers. At the same time, the company stated that "cooperation with Nippon Steel will strengthen the steel industry, employment opportunities, and supply chain in the United States." The statement also stated that in Pennsylvania alone, the US Steel Company has nearly 4000 employees.
On the 4th, Nippon Steel released a post on its official website announcing its follow-up governance policies towards the US steel company, reiterating that the latter will still be an American company. Meanwhile, Nippon Steel stated that if the acquisition is successful, the headquarters of US Steel Corporation will still be located in Pittsburgh, and the core senior management and most board members of the US company will be US citizens; Production will prioritize meeting the demand of the US steel market, and no production capacity or job positions will be transferred outside the United States. There will be no layoffs, factory closures, or idle facilities due to acquisition transactions.
In order to further advance this acquisition, as a key negotiator for Japan, Takahiro Mori, Chairman of Nippon Steel, plans to visit the United States within this month. However, the specific date and who Morihiro will meet with at that time have not been disclosed by Nippon Steel.
Complete the transaction before December?
The US Steel Company, with a history of over 120 years, was once known as the calling card of the US steel industry. And Nippon Steel is the fourth largest steel manufacturer in the world. The industry expects that if the acquisition of US Steel is successful, Japan Steel's crude steel production capacity will greatly increase, and it is expected to become the world's second largest steel producer.
Public information shows that in 1970, Nippon Steel, formed by the merger of Hachiman and Fuji Iron, surpassed the United States Steel Company in crude steel production and became the world's largest. However, the subsequent two oil crises and the collapse of Japan's foam economy led to a long cold winter for the steel industry. In 2012, Nippon Steel and Sumitomo Metal Industries merged to form Nippon Steel&Sumitomo Metal. In April 2019, Nippon Steel and Sumitomo Metal were renamed as "Nippon Steel".
In the 1990s, Japanese steel companies had the best industrial technology, but it was difficult for them to succeed in the US market. Chen Yan believes that the main difference lies in the US labor union system and the industry organizations of steel workers' requirements for environmental protection, technology, and other aspects, which are completely different from the Japanese market.
However, even without a successful precedent, Nippon Steel still looks forward to expanding its presence in the US market. In Chen Yan's opinion, it is mainly Japanese companies that see the large demand for imported steel plates from abroad in the United States every year. During the previous Trump administration, additional import tariffs were imposed on steel, and coupled with the annual gap in the US steel industry, the prospect of directly producing steel in the US through acquisitions and other means is promising. Therefore, this is also why Nippon Steel has not given up lobbying US industry groups and members of Congress to promote this acquisition
In the eyes of Nippon Steel, this is a 'no loss' deal. The company's executives have publicly emphasized to the media the profitability of US Steel in the past two years: in 2023, US Steel will make a profit of approximately 150 billion yen per year and be able to recoup its acquisition costs within 14 years. Given the strong demand for steel in the US market and the potential for steel price increases, Nippon Steel believes that the time to recoup investment may be shorter.
At present, the two companies still hope to complete the transaction before December this year.