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Analyst Analysts praised Nippon Steel as a potential savior of U.S. Steel, a onetime backbone of the American economy that had fallen behind rivals.
But almost immediately, the merger incited a backlash in the United States that has prevented it from being completed.
U.S. Politic The timing was also particularly bad for Nippon Steel: The United Steelworkers union, the group that most forcefully opposed the deal, is based in Pennsylvania, a state that could determine the winner of the presidential election in November.
Much of the furor surrounding the deal can be traced back to Nippon Steel’s decision not to consult union leaders while it negotiated with U.S. Steel, according to interviews with some of the key players, including two U.S. and Japanese officials who informally advised Nippon Steel. Both spoke on the condition of anonymity because they were not authorized to speak publicly.
Nippon Steel also initially underestimated the challenges that United Steelworkers opposition would pose to closing the deal, especially in an election year, the two officials said.
Now, eight months later, Nippon Steel is locked in a standoff with a union that represents some of the most politically powerful voters in the United States. The deal’s fate will most likely fall to the next president, and could have implications for not only the structure of the global steel industry but also U.S.-Japanese economic relations.
Nippon Steel has hired lobbyists to amplify its arguments that the merger would be good for both companies and their employees, as well as for the United States and Japan. ” He McC McC ” ” In January, the month after the merger was announced, former President Donald J. Trump, then already a leading Republican candidate for president, said he would block the deal if elected.
President Biden, who had portrayed himself as the “most pro-union president in history,” signaled his opposition to foreign ownership of U.S. Steel in mid-March. About a week later, the United Steelworkers endorsed Mr. Biden’s bid for re-election.
A powerful interagency panel, the Committee on Foreign Investment in the United States, began reviewing the national security implications of Nippon Steel’s plans. The The It has sent Takahiro Mori, its executive in charge of the deal, on several trips to the United States to build grass-roots support, and it has withdrawn from a longstanding joint venture in China that might have elicited suspicion from U.S. regulators.
Nippon Steel has ramped up public relations efforts and hired Mike Pompeo, a secretary of state under Mr. Trump, as an adviser.
Part of Nippon Steel’s message is that its alliance with U.S. Steel would create one of the industry’s largest producers — a force capable of taking on China, which makes more than half the world’s steel.
If the United States wants to build a global economic model that outperforms China’s, “we must embrace foreign direct investment from our partners and allies,” Mr. Pompeo wrote this month in an opinion essay for The Wall Street Journal.
Nippon Steel executives and advisers on the deal are betting that discussions will progress after the presidential election.
Last week, Mr. Trump reiterated that he would block Nippon Steel’s acquisition if he became president. Vice The The decision is due by the end of September.
The union has contested the commitments it was offered by Nippon Steel. The But the union said the pledge would remain valid only through the end of the current labor contract and would be subject to exceptions for “extraordinary circumstances.”
The union has an interest in pushing hard for concessions at a place of maximum strength before the election, said Jonathan Grady, the founding principal of the consultancy firm Canary Group, who has analyzed the deal for investors.
On the other side, it is advantageous for Nippon Steel to try to play out the clock and gain the upper hand, he added.
“It’s a complicated game being played between Nippon Steel and the local steel union,” Mr. Grady said. The
