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US President Joe Biden speaks to members of the media on the South Lawn of the White House after arriving on Marine One in Washington, DC, US, on Monday, Sept. 2, 2024.
Report: Biden set to reject US Steel deal
Nippon Steel is playing its hand close to its vest and hasn’t commented on the reports of the deal being blocked. Its nearly $15 billion offer was approved by US Steel shareholders in the spring, and it would be highly unusual for a company from a close ally like Japan to be prohibited from investing in the US.
Shares in US Steel fell by roughly 18% on Wednesday’s news, trading around $29, well under the $55 per share value that Nippon Steel offered in December 2023. The company warned thousands of jobs were at risk in the key — if not downright determinative — swing state of Pennsylvania should the deal fall through. Nonetheless, Democrats are betting that this decision will help them win the state by playing up protectionist bonafides. We’ll see if the theory holds.
Australian Prime Minister Anthony Albanese and New South Wales Premier Chris Minns join other politicians as they lay flowers at the scene of Saturday's mass stabbing at Bondi Junction, Sydney, Australia April 14, 2024.
Hard numbers: Sydney stabbing, Pricey Pakistan, US Steel deal, Costco gold rush
6: Australia is reeling from one of the country’s deadliest mass killings after six shoppers were stabbed to death at a mall in Sydney on Saturday. The attack left several others injured, including a baby who is in intensive care. The assailant, who was shot dead by police, was known to authorities and had been diagnosed with a mental illness as a teenager.
25: Pakistan has the highest cost of living in Asia, according to a report from the Asian Development Bank, and it’s only set to grow with a crushing 25% inflation rate. Authorities have hiked interest rates to 22% to try to alleviate the problem, but Pakistan’s economy will likely require further support from the International Monetary Fund.
14.9 billion: Shareholders in US Steel overwhelmingly voted to approve an offer from Nippon Steel to acquire the company at about $55 a share — but don’t expect the deal to close anytime soon. US President Joe Biden has expressed opposition to the deal, which could cost him crucial support from steelworkers in upper Midwestern swing states like Michigan, Pennsylvania, and Wisconsin.
200 million: Wholesaler Costco is estimated to be selling over $200 million worth in one-ounce gold barsevery month, according to an analysis by Wells Fargo. Those who made their purchases in the fall, when Costco was selling the bars for around $2,000 each have earned a nice bit of profit, as gold has surged to over $2,300 an ounce since March.Thick plates of steel for use in construction and ship building are hot-rolled by machinery at the Nippon Steel Corp. Kimitsu steel mill in Kimitsu, Japan near Tokyo February 6, 2008.
Biden slams Nippon Steel deal — but Tokyo plays it cool
US President Joe Biden on Thursday came out against Japan’s largest steel producer acquiring Pittsburgh-based US Steel, saying America must “maintain strong American steel companies powered by American steelworkers.”
Nippon Steel made an offer worth over $14 billion in December, and shortly afterward the White House indicated it would be scrutinized by the Committee on Foreign Investments in the United States. For now, the deal is still on, but CFIUS review is usually reserved for deals involving companies from potential adversaries – not from trusted allies like Japan — and presidents rarely comment before the committee finishes.
But this is 2024. Biden and presumptive GOP nominee Donald Trump are battling over blue-collar workers in key swing states like Michigan and Pennsylvania in November. Trump promised to block the deal “instantaneously” during a meeting with Teamsters earlier this year, and Biden has never been shy to flex his union bona fides.
How does Tokyo feel? Discretion seems to be the better part of valor for Prime Minister Fumio Kishida.
“Tokyo understands that in love and politics, timing is everything and that the political timing of this deal is awful for Biden,” says Eurasia Group’s Japan analyst David Boling. “That doesn’t mean that Tokyo is happy that Washington is treating an ally this way. But it’s not putting up a big fuss.”
An entrance to the U.S. Steel Great Lakes Works plant is seen in Ecorse, Michigan, U.S., September 24, 2019. Picture taken September 24, 2019.
Nippon Steel’s US deal may be good business, but it’s bad politics
The Global Business Alliance, a group of multinational corporations, is urging the Biden administration to keep politics out of any national security review of Nippon Steel’s offer to buy U.S. Steel — but politics is precisely the problem.
The deal: Japan’s largest steel producer is offering over $14 billion to buy U.S. Steel, and on paper, it shouldn’t be a particularly painful process. The offer is a nice premium over where U.S. Steel’s stock is currently trading, and as Japan is among the US’ closest allies, under normal circumstances, government oversight would be only routine. So why did Nippon Steel have an executive in Washington last week to meet with concerned lawmakers?
Because this is 2024. U.S. Steel owns major plants in Michigan and Pennsylvania, two states US President Joe Biden must win in November to secure re-election – and the United Steelworkers union is mad enough to spit. Neither U.S. Steel nor Nippon Steel consulted the union as the deal was being negotiated, and union leadership is hammering management for selling out to a foreign-owned company.
So rather than a swift approval, Biden (and, it should be said, a bipartisan group of lawmakers) has expressed support for a review through the Committee on Foreign Investment in the United States, an agency set up to safeguard national security in major deals by foreign-owned corporations.
And, gosh, who knows how long that could take? GZERO’s crystal ball keeps pointing to a resolution sometime after Tuesday, Nov. 5.