The United Steelworkers (USW) union on Monday ripped U.S. Steel and its proposed acquirer, Nippon Steel, for agreeing to a $15 billion deal without its approval.
Why it matters: The USW’s response sets the stage for a fight over the transaction. The union has said previously that its contract with U.S. Steel requires any prospective buyer to agree to a new labor deal before a sale can be finalized.
Driving the news: On Monday, Japan-based Nippon announced a deal to acquire U.S. Steel — an iconic American company that powered the nation’s building boom in the 1900s, but later became a symbol of industrial decline.
- However, the deal is likely to attract tough regulatory scrutiny, especially given the prospective buyer is not US-based.
- Anti-trust scrutiny is not a concern “because they have very little footprint in North America,” CFRA Research’s Matthew Miller tells Axios.
- But, he adds, the deal could face scrutiny from the U.S. government over the fact that a foreign company would be acquiring critical American assets.
What they’re saying: USW President David McCall hammered the deal as “greedy” and “shortsighted” and pledged to “exercise the full measure of our agreements to ensure that whatever happens next with U.S. Steel, we protect the good, family-sustaining jobs we bargained.”
- “Neither U.S. Steel nor Nippon reached out to our union regarding the deal, which is in itself a violation of our partnership agreement that requires U.S. Steel to notify us of a change in control or business conditions,” McCall said.
- “Based on this alone, the USW does not believe that Nippon understands the full breadth of the obligations of all our agreements, and we do not know whether it has the capacity to live up to our existing contract.”
- He also criticized U.S. Steel for arranging a deal to “sell to a foreign-owned company.”
Flashback: Earlier this year, U.S. Steel rejected a bid by U.S.-based Cleveland-Cliffs, and said it would explore strategic alternatives.
- Potential rival bids by Esmark and ArcelorMittal never came to fruition after the USW said it had transferred its bidding rights to Cleveland-Cliffs.
- The Cleveland-Cliffs deal also faced opposition from the auto industry, one of the steel sector’s biggest clients.
The other side: Representatives from U.S. Steel and Nippon Steel did not immediately respond to Axios’ requests for comment on the USW’s statement.
The big question: Whether U.S. Steel get this deal across the finish line amid opposition from the USW and political scrutiny.
- 2024 “is a presidential election year, and this is going to be a political lightning rod,” Miller says. “You don’t want to be on the wrong side of that.”
