#Japan’s top steelmaker, #Nippon_Steel, is sticking to its plan to close a deal by year-end to buy U.S. Steel, which it expects to boost output and profits, the company said on Thursday, despite resistance to the transaction in the #USA
In December, Nippon Steel offered nearly $15 billion to take over iconic U.S. #Steel, drawing resistance from both President Joe Biden and Donald Trump, his likely challenger in the Nov. 5 election, as well as the United #Steelworkers (#USW) union.
“U.S. Steel products will remain mined, melted and made in America and will continue supplying further sophisticated steel products to American industry,” Nippon Steel said.
It reiterated its latest guidance to close the deal by year-end, pending U.S. approvals.
This month, Nippon #Steel moved the deadline from end-September after the U.S. Department of Justice sought more details and materials in an antitrust review. The European Commission has already approved the deal.
The takeover should bring Nippon Steel’s global crude steel capacity to 86 million tons per year, close to its goal of 100 million, and to boost underlying business profit to 1 trillion yen after March 2025 from 935 billion yen last year.
To win support from the #USW, Nippon Steel has pledged to move its U.S. headquarters to Pittsburgh, where U.S. Steel is based, offering specific commitments on #job security and additional investments if the deal goes through.
#Takahiro #Mori, #Nippon Steel’s vice chairman and key negotiator on the takeover, told a briefing that thanks to the deal, the U.S. company will grow, adding jobs and profits.
“Nothing has changed in our strong determination to close the deal at the earliest possible,” Mori said, adding that ‘politics is apparently affecting’ delay in the USW’s approval.
U.S. Steel is based in the swing state of #Pennsylvania, key for both candidates. “It has already become a political issue and will not become a political issue any further,” Mori said.
As U.S. Steel shareholders have already approved the deal, other contenders cannot buy the company, he added.
Last year, U.S. Steel rejected a $7.3-billion offer from rival steelmaker Cleveland-Cliffs (NYSE:#CLF), whose chief executive Lourenco Goncalves continued to criticise the deal.
PROFIT DOWN
Nippon Steel beat estimates on Thursday, but posted a decline of 20.8% in net profit of 549.4 billion yen ($3.53 #billion) for the year ended in March, because of losses on inactive facilities at home.
Nippon Steel had been expected to post a net #profit of 464.6 billion yen, an LSEG poll of analysts showed.
Excluding the U.S. Steel deal, Nippon Steel forecasts a net profit of 300 #billion #yen for the year ending in March 2025, amid continuing losses on inactive facilities, while it expects domestic and overseas steel demand to stay low.
To redeem subordinated bonds issued in September 2019 and strengthen its financial position amid the proposed takeover, Nippon Steel plans to raise up to 250 billion yen via subordinated syndicated loans and public subordinated bonds.
($1=155.7000 yen)
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