NEW YORK: Shareholders of United States Steel Corp. are set to vote on the proposed acquisition by Nippon Steel Corp. of Japan at an extraordinary meeting on Friday.

The proposal is likely to be approved by the shareholders because the acquisition price of 2 trillion yen is much higher than the U.S. steelmaker’s current market value.

As U.S. President Joe Biden of the Democratic Party and former U.S. President Donald Trump of the Republican Party both expressed their opposition to the buyout plan ahead of the presidential election in autumn, however, the deal has developed into a political issue in the United States and dark clouds loom over the realization of the acquisition.

In December last year, Nippon Steel announced a plan to acquire all shares of U.S. Steel and make it a subsidiary by September this year.

Last week, major U.S. Steel shareholder Pentwater Capital Management LP said Nippon Steel’s planned acquisition of the U.S. firm benefits all stakeholders, in light of the high acquisition price and the possibility of Nippon Steel creating new jobs. U.S. proxy advisory company Glass Lewis urged U.S. Steel shareholders to vote in favor of the buyout’s proposal.

Even if shareholders approve the acquisition, many uncertainties remain.

Nippon Steel said it will not cut jobs in connection with the deal, but the United Steelworkers union reacted sharply against the pledge, saying it is only an empty promise. Both Biden and Trump standing against the deal, reflecting their desire to win union votes in the presidential election, has also been a drag.

Some say the acquisition will help strengthen the steel supply chain, while others, including Democratic Senator Sherrod Brown, worry that it will have a negative impact on national security. The U.S. government’s Committee on Foreign Investment in the United States (CFIUS) is conducting a security-related screening of the deal.

With Nippon Steel facing headwinds, the deal may not go smoothly as many hurdles await, including passing the CFIUS review and obtaining approval from antitrust authorities.

JIJI Press