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Nippon Steel executive to meet with USW head to seek support for US Steel deal

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TOKYO: A senior Nippon Steel executive told Reuters he would meet the head of the United Steelworkers (USW) union this month to seek support for the US Steel acquisition, saying he was confident the deal could be finalized by the end of September.

Getting their support could help the world’s fourth-largest steelmaker cross the finish line on buying its U.S. rival for $14.9 billion. The merger has drawn criticism from some Democratic and Republican lawmakers who worry about the national security implications of the takeover, even though the United States and Japan are close allies, as well as the powerful United Steelworkers Union, who are concerned about how their workers might behave under Nippon Steel’s management.

“I think we have resolved the contractual issues,” Executive Vice President Takahiro Mori said in a Feb. 28 interview, emphasizing Nippon Steel’s intention to honor all current agreements between the union and US Steel.

Mori will meet with the USW chief in early March after a non-disclosure agreement signed with the union on February 26, which he sees as a positive indicator in signaling their willingness to talk.

“We will have heart-to-heart discussions” to address concerns, particularly regarding employment and factories, he said.

Nippon Steel believes it can strengthen US Steel’s business without job cuts or plant closures by providing its cutting-edge technologies, including those for high-quality electromagnetic steel sheets used in electric vehicles.

“These products could be a game changer in the United States,” Mori said, adding that other skills in blast furnace operation and decarbonization would also contribute to the growth of the American company.

Nippon Steel aims to find common ground with the USW by early April, when US Steel is expected to hold a shareholder meeting to vote on approving the deal, which would be delayed from March due to additional paperwork required with the Securities and Exchange Commission (SEC). , Mori said.

Mori is optimistic that she will be able to win shareholder approval thanks to the hefty 40 percent bonus she is paying.

POLITICAL QUESTION

Asked about opposition from former U.S. President Donald Trump and some politicians, Mori said the Japanese company’s priority now is to gain union support because then it will “no longer be a political issue “.

“This agreement will make US Steel, the steel industry and its customers, such as automakers, stronger. The entire supply chain will become stronger…and so will national security,” Mori said, adding that there had been few objections from people in business and the American economy.

Nippon Steel is sticking to its goal of closing the deal between June and September, Mori said.

For Japan, the largest foreign investor in the United States, a failure of the deal could prompt companies to consider acquisitions in other strategic sectors and force them to be more risk-averse when evaluating transactions, say former officials, lawyers, analysts and executives.

Mori also said that if the United States rejects the deal by taking “extrajudicial measures,” it would significantly harm the appetite of Japanese companies to invest in the United States.

“This would affect Japan’s investment behavior and make other countries close to the United States wary,” he said. “It’s going to be a huge inconvenience for both of us.”

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