Bangkok Post

Nippon sure of US Steel deal in 2024

- YUKA OBAYASHI KATYA GOLUBKOVA

Japan’s top steelmaker, Nippon Steel, is sticking to its plan to close a deal by year-end to buy US Steel, which it expects to boost output and profits, the company said Thursday, despite resistance to the transactio­n in the US.

In December, Nippon Steel offered nearly $15 billion to take over iconic US Steel, drawing resistance from both US President Joe Biden and Donald Trump, Biden’s likely challenger in the Nov 5 elections, as well as from the United Steelworke­rs (USW) union.

“US 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 reaffirmed its latest guidance to close the deal by year-end, pending US approvals.

This month, Nippon Steel moved the deadline from end-September after the US 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 tonnes per year, close to its goal of 100 million, and to boost underlying business profit to ¥1 trillion after March 2025 from ¥935 billion last year.

To win support from the USW, Nippon Steel has pledged to move its US headquarte­rs to Pittsburgh, where US 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 US 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.

US 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.

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As US Steel shareholde­rs have already approved the deal, other contenders cannot buy the company, he added.

Last year, US Steel rejected a $7.3-billion offer from rival steelmaker Cleveland-Cliffs, whose chief executive Lourenco Goncalves continued to criticise the deal.

Nippon Steel beat estimates on Thursday, but posted a decline of 20.8% in net profit of ¥549.4 billion ($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, an LSEG poll of analysts showed.

Excluding the US Steel deal, Nippon Steel forecasts a net profit of ¥300 billion 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 via subordinat­ed syndicated loans and public subordinat­ed bonds.

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