Sunday, July 21, 2024

EU clears $14.9 billion purchase of U.S. Steel by Japan’s Nippon

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(Reuters) -The European Union cleared U.S. Steel’s $14.9 billion buyout by Japan’s Nippon Steel on Monday, allaying competition concerns from a deal that has drawn political opposition in the United States.

The approval by the European Commission was expected to be a formality but in the U.S., the deal is facing resistance from several lawmakers worried about national security and U.S. Steel’s union, which is concerned about job losses.

While U.S. President Joe Biden has said Pennsylvania-based U.S. Steel should remain domestically owned, Republican front runner for the presidential race, Donald Trump said he would block the deal if elected.

Japan’s Nippon has tried to address the concerns by offering to move its U.S. headquarters to Pittsburgh, where U.S. Steel is based and by promising to honor all agreements in place between U.S. Steel and the United Steelworkers.

Nippon had in December clinched a deal to buy the 122-year-old iconic steelmaker, prevailing over rivals bidders such as Cleveland-Cliffs, ArcelorMittal and Nucor.

The acquisition of U.S. Steel will help Nippon, the world’s fourth-largest steel maker, move toward 100 million metric tons of global crude steel capacity.

Last week, U.S. Steel said the Department of Justice had sought more details on the proposed merger as part of an antitrust review.

Despite mounting opposition, an overwhelming majority of U.S. Steel shareholders voted in favor of the deal in April.

The company now expects the deal to close in the second half of 2024 compared to its prior deadline of second to third quarter.

The European Commission said on Monday it cleared the deal given the companies’ “limited market positions resulting from the proposed transaction”.

Shares of U.S. Steel rose 2% in morning trade. They have lost a quarter of their value so far this year.

(Reporting by Aatreyee Dasgupta in Bengaluru; Editing by Arun Koyyur)

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