Nippon Steel seeks to close US Steel deal before Trump returns to White House
Nippon Steel keeps forecast of closing US Steel deal before year-end
Exec says US review of $15 billion takeover proceeds 'solemnly'
Cuts full-year profit forecast on weak raw material prices, low demand
Rewrites, adds executive's comments, background on US steel acquisition process
By Katya Golubkova and Yuka Obayashi
TOKYO, Nov 7 (Reuters) -Japan's Nippon Steel 5401.T hopes to close its $15 billion deal to buy US Steel X.N by year-end before Republican Donald Trump retakes the White House in January, a senior executive said, as the acquisition is core to its future growth.
Nippon Steel, Japan's top steelmaker and the fourth largest globally, agreed to buy US Steel in December but faced opposition from a powerful labour union as well as from Trump, and President Joe Biden, among others.
Before the Nov. 5 election which handed him victory, Trump promised to block the deal if re-elected.
"We believe we can close the US Steel deal by the end of the year under the current U.S. administration," Takahiro Mori, Nippon Steel's vice chairman and key negotiator on the deal, told reporters on Thursday.
The Committee on Foreign Investment in the United States (CFIUS) has extended its review of the $15 billion deal until the end of December. Mori said on Thursday that CFIUS' and antitrust authorities' reviews were proceeding 'solemnly'.
"Now that the U.S. election is over and we are in a position to have a proper discussion, there is no reason to postpone the review process any longer," Mori added.
In order to win the approval, Nippon Steel has made social guarantee and investment pledges to US Steel and the United Steelworkers labour union, and promised to sell a stake in a U.S. steel plant's joint venture if it succeeds in the buyout.
"The United States is essential to our continued growth as it is the world's largest market for high-grade steel and is a growing market with little China risk," Mori said.
With US Steel, Nippon Steel aims to raise its global steel production capacity to 85 million metric tons per year from 65 million tons now, and the asset is core to its goal of having over 100 million tons of production capacity in the long-term.
Mori, having paid numerous visits to the US seeking approval for the deal, believes that the takeover is in line with Trump's goal of attracting investments, adding that his company needs to build close ties with the new administration.
Earlier this year, Nippon Steel hired former U.S. Secretary of State Mike Pompeo, who served under Trump's first presidency in 2017-2021, as an adviser to help in lobbying for the deal.
On Thursday, Nippon Steel revised its full-year net profit outlook to 310 billion yen ($2 billion) from a previous forecast of 340 billion yen due to inventory losses from weak raw material prices and sluggish domestic demand.
Even as Nippon Steel revised its forecast for the fiscal year ending March, it expects to maintain its full-year dividend target at 160 yen apiece.
Its net profit for the six-month period ended Sept. 30 was down 19% at 243.4 billion yen year-on-year.
($1 = 154.0800 yen)
Reporting by Katya Golubkova; Editing by Jacqueline Wong, Sherry Jacob-Phillips, Philippa Fletcher
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
