REGIONAL— U.S. Steel shareholders voted overwhelmingly this week to approve the sale of the historic domestic steel manufacturer to Nippon Steel, of Japan— but where it goes from there isn’t clear.
The outcome could have significant impacts on the Iron Range, where U.S. Steel owns and operates some of the region’s largest employers, including the Minntac and Keetac taconite facilities.
The tendered offer is an all-cash deal valued at $55 per share of stock, or an estimated $14.1 billion. With the assumption of debt, U.S. Steel says the deal, originally announced in December, is worth a total of $14.9 billion.
More than 98 percent of the shares voted at a special shareholders meeting held April 12, representing approximately 71 percent of the shares of U. S. Steel’s common stock, favored the proposed sale.
“The overwhelming support from our stockholders is a clear endorsement that they recognize the compelling rationale for our transaction with NSC,” stated U.S. Steel President and CEO David Burritt. “This is an important milestone as we progress toward completing the transaction. We are one step closer to bringing together the best of our companies and moving forward together as the ‘Best Steelmaker with World-Leading Capabilities.’”
While the deal may be a good one for U.S. Steel shareholders, federal officials in Washington say the transaction raises concerns about its impact on unionized workers, U.S. supply chains, and national security.
President Joe Biden came out in opposition to the deal last month, saying it was vital for U.S. Steel “to remain an American steel company that is domestically owned and operated.”
Financier J.P. Morgan founded U.S. Steel nearly 125 years ago and it was long one of the giants of American industry. But the company has struggled more recently to compete against cheaper competition, both foreign and domestic, even through periods of protectionist policies. It has been soliciting tender offers for more than a year, although it rejected a less generous offer from U.S. based Cleveland-Cliffs early last fall. That offer, unlike the one from Nippon, had the full-throated support of the United Steelworkers, who represent the roughly 11,000 U.S. Steel employees in the country.
The Steelworkers remain strongly opposed to the Nippon offer and that opposition has put added pressure on Biden to block the deal. Biden recently won the endorsement of the Steelworkers union, which represents nearly 850,000 industrial workers around the country, in his bid for re-election over presumptive GOP nominee Donald Trump. Trump has promised he would block the deal if elected, which puts Biden in a difficult position should he opt to allow the acquisition to ultimately move forward.
While shareholders have given the sale a green light, it still faces review from the Committee on Foreign Investment, an executive branch, inter-agency committee of the federal government which reviews the national security implications of foreign investments in U.S. companies or operations, using classified information from the U.S. intelligence community. Should that council come out in opposition to the deal, it could give Biden reason to follow through on his announced opposition.