US government to have control in Nippon Steel-U.S. Steel deal, Trump and McCormick say
HARRISBURG, Pa. (AP) — U.S. Sen. David McCormick said Tuesday that an arrangement that will allow Japan-based Nippon Steel to invest in U.S. Steel will guarantee an American CEO, a majority of board members from the United States and U.S. government approval over certain corporate functions.
McCormick spoke on CNBC, four days after President Donald Trump suggested that an agreement on a 'partnership' was at hand to resolve Nippon Steel's nearly $15 billion bid to buy iconic American steelmaker U.S. Steel that has been blocked on national security grounds.
Following his statement Friday, Trump on Sunday told reporters that U.S. Steel will be 'controlled by the United States, otherwise I wouldn't make the deal' and that 'it's an investment and it's a partial ownership but it'll be controlled by the U.S.A.'
McCormick said the idea was Nippon Steel's proposal, even though Nippon Steel has yet to say anything about whether it is willing to accept the concept described by Trump and McCormick in place of its bid to control the company.
Many of the aspects outlined by McCormick and Trump have been floated previously by Nippon Steel.
Keeping U.S. Steel's headquarters had always been part of Nippon Steel's bid to buy it. Nippon had pledged to put U.S. Steel under a board made up of a majority of American citizens, with a management team made up of American citizens.
Nippon Steel also had pledged not to conduct layoffs or plant closings as a result of the transaction and to protect the best interests of U.S. Steel in trade matters. To sweeten the deal, Nippon Steel had offered up a $2.7 billion commitment to upgrade U.S. Steel's two blast furnaces and pledged that it wouldn't import steel slabs that would compete with the facilities.
Nippon Steel did issue an approving statement on Friday that said the 'partnership between Nippon Steel and U. S. Steel is a game changer.' But it didn't describe terms of a deal or say whether it had agreed to any final terms.
McCormick said Nippon has agreed to invest $14 billion into U.S. Steel, with a 'national security agreement' that will be signed with the U.S. government. The deal entails an American CEO, an American-majority board and a 'golden share' which requires U.S. government approval of a number of the board members to will allow the U.S. to ensure that production levels aren't cut, McCormick said.
The deal involves building a new electric arc furnace — a more modern steel mill that melts down scrap — and investing $2.4 billion into the U.S. Steel facilities in the Pittsburgh area, including the Edgar Thomson Works blast furnace that was built in the 19th century.
McCormick said Nippon Steel will have members of the board and the entity will be 'part of their overall corporate structure.'
He also said Nippon Steel gets what they wanted, which is access to the U.S. market and the benefits of the long-running protectionist U.S. tariffs that analysts say has helped reinvigorate domestic steel.
'I think they know what they're getting into,' McCormick said. 'They negotiated it. It was their proposal, and I think they saw it as a great strategic move for them and one that's great for the United States.'
U.S. Steel's board and shareholders had approved Nippon Steel's bid, but it was opposed by the United Steelworkers union and was blocked by former President Joe Biden on his way out of office. After Trump became president, he subjected it to another national security review by the Committee on Foreign Investment in the United States.
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