The fate of U.S. Steel hangs in the balance after shareholders overwhelmingly approved a $14.1 billion acquisition offer from Nippon Steel Corp. However, despite shareholder support, the deal faces significant hurdles in the form of regulatory scrutiny and political opposition.
At a special vote on Friday, a staggering 98% of US Steel shareholders endorsed the Japanese steel giant’s offer of $55 per share. This outcome was widely expected, but it now shifts the focus to the ongoing review by U.S. regulators. This review has become a contentious political issue amidst a heated presidential election year.
Political Opposition Clouds Deal Landscape
The proposed acquisition, first announced in December 2023, has drawn criticism from both major party candidates. Both President Joe Biden and presumptive Republican nominee Donald Trump have voiced opposition to foreign ownership of US Steel. This stance is likely aimed at securing blue-collar votes in key swing states during the upcoming November election.
President Biden has been a vocal advocate for domestic ownership within the steel industry and has expressed strong support for American workers. These pronouncements cast a shadow of doubt on the deal’s ultimate approval by the White House.
“Shareholder approval is one thing,” said Timna Tanners, an analyst at Wolfe Research, “but we still believe the White House will have the final say.”
Regulatory Maze and Potential Delays
Beyond the political challenges, the takeover must also undergo a rigorous review by the Committee on Foreign Investment in the United States (CFIUS). According to sources familiar with the matter, this review process is unlikely to be completed before late 2024 and could potentially drag on into 2025. This extended timeline throws the deal right into the heart of the U.S. election campaign, further complicating matters.
In light of these potential delays, US Steel and Nippon Steel are reportedly considering a formal extension of the deadline for finalizing the deal.
The future of the US Steel-Nippon Steel acquisition remains shrouded in uncertainty. While shareholders have overwhelmingly signaled their approval, the deal faces significant roadblocks in the form of regulatory hurdles and political opposition. The extended review timeline adds another layer of complexity, placing the deal’s fate in limbo until at least late 2024.
Source: Mining.com
