Challenges for US Steel acquisition dealーNHK WORLD-JAPAN NEWS
we start this hour with some developments in a high-profile deal in the international steel industry Japan’s Nepon Steel is hoping to advance negotiations on a national security agreement with the White House to acquire US Steel aiming to operate it as a wholly owned subsidiary The agreement is likely to guarantee that US Steel’s production capacity will not be reduced for a certain period and that a majority of the company’s board members will be American citizens President Donald Trump stressed the importance of the company staying under US control We’re here today to celebrate a blockbuster agreement that will ensure this storyried American company stays in American company You’re going to stay an American company You know that right but we’re going to have a great partner Speaking at a rally at a US steel plant Trump said the Japanese firm has promised to invest $14 billion in its American counterpart However later in the day he emphasized that he still has to sign off on any agreement I have to approve the final deal with Nippon and uh we haven’t seen that final deal yet but a decision on the deal is expected by Thursday this week Now Nepon Steel’s takeover plan was announced in December 2023 and it soon became a major political issue Donald Trump called the deal a horrible thing when he was a contender for president in January 2024 He promised to block it immediately if he won office Trump was sworn in as president on January 20th He held summit talks with Japan’s Prime Minister Ishibasheru in early February The US Steel is a very important company to us We didn’t want to see that leave uh and it wouldn’t actually leave but the concept psychologically not good Trump said Nepon Steel agreed to invest heavily in US steel as opposed to owning it Trump reaffirmed his hardline just days later saying “Nobody can have a majority stake in US steel.” On April 7th the president instructed the Committee on Foreign Investment to conduct a fresh review of the proposed deal to identify any national security risks And for more on the possible deal between the two steel companies we’re joined by Yuko Fukushima from our businesses So Yuko what significance does it have if Nepon Steel concludes a national security agreement with the US government well what I’ve heard there doesn’t see much significance Um I’ve been talking to an international lawyer lawyer who’s an expert on crossber M&As Yamadada Koki says when CPHAS that’s the committee for foreign uh uh investment reviews a deal it is common for the acquired acquiring foreign company to sign a contract with the US agree uh government uh on security issues it’s not no surprise but uh uh that uh about the fact that they are entering into the national security agreement uh but uh I think what what important is uh the content of what what is to be agreed what we know so far for example if uh there are a certain number of board members who are American citizens how do you think that would affect uh NPON steel’s attempt to go into the US market just simply having a know majority of US citizens in the board it’s it’s a pretty normal thing for the US company and even for the US uh subsidiaries and whether the question is whether still a shareholder and a parent company that has grips over those US board members I would like to note that in Napos’s previous proposal on this national security agreement that they are also offering three independent directors uh US citizen who needs to be approved by CPHAS the US government and about the promise of not shutting down US factories for a certain period of time Do you think that would affect Nepon Steel’s um business in the US that is basically again giving up the control over the the the how to run the business for 10 years in in certain uh states but I think what the Nepo still wants to have is the US production capacity I guess what Napoleon still is seeing is that even though they don’t have the capacity to reduce the production capacity for this 10 years but the gaining that capacity on the other hand is more important uh than you having those risks So gaining US production capacity what is it that Napoleon steel wants so much in the US market right Well the US is the biggest um market for advanced steel which nipple steel is good at producing and with all these tariffs on steel from overseas it is critical for nipple steel to enter the US market Then what are uh some of the risks for the Japanese steel maker if it actually you know manages to reach a deal with US steel well it remains to be seen whether nipple steel can control US steel You know Yamada says it is actually easier for Napolon Steel to make a deal compared to what it will go it’s going to face afterwards you know he has seen many companies investing in the US and elsewhere uh only to see those businesses fail and in many cases they can’t retrieve the investment because they are not good at managing the companies they bought and Yamada says it will be an even more difficult endeavor for Nippon Steel if US company let’s see if subsidiary subsidiary wants to uh oppose to or reveal uh the the strategy that the Japan Japan Nepon still would like to uh implement in the US then these national security agreement or power of US government is something they would try to use for then uh what can other companies are looking into investing in or outright buy US firms learn from this example well Yamana points out that Nippon Steel’s case is pretty unique in that it coincided with the US presidential elections and other factors Well having said that uh Yamana says that uh when considering an MA M&A in advanced economy they need to consider the firms need to consider political risks now as they do in emerging nations considering the the the status of the entire world uh you know that the public opinions are diver uh you know diversified or divided and the politicians are uh taking more like a populistic approaches So in that way like even you are making the M&A or investment in the developed countries this political risk could be a a huge factor uh for uh you know for the successful M&A transaction
Japan’s Nippon Steel is hoping to advance negotiations on a national security agreement with the White House to acquire US Steel and operate it as a wholly owned subsidiary, but challenges remain. #japan #usa #donaldtrump #security #business #analysis #world
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