Nippon Steel logo is displayed at the company's headquarters in Tokyo, Japan April 1. The Tokyo-based steel maker won a bidding war for U.S. Steel by promising to invest US$2.7-billion in its new American partner.based on sound industrial logic, the Japanese giant Nippon Steel is bumping up against the one roadblock even the best deal maker can’t clear: political payback. The deal now hangs in a sort of patriotic – maybe even jingoistic – twilight zone, its hopes pinned to an outgoing U.S.
president who has said repeatedly he opposes the acquisition and an incoming president who feels the same way. Nippon has made all the right moves. The Tokyo-based steel maker won a bidding war for U.S. Steel by offering nearly US$15-billion, double that of its nearest rival, and promising to invest US$2.7-billion in its new American partner. Nippon garnered support from the Pittsburgh-based steelmaker’s board and executive team, who have seen their company’s prospects shrink as the domestic steel market has softened in the last couple of years. Nippon has made a compelling case that the combined entity, which would constitute the world’s third-largest steel maker, is essential to take on cheap Chinese steel that is reshaping the dynamics of the global market. Last week, Nippon even took its case to the grassroots PR level, collecting testimonials supporting the deal from more than a dozen communities where U.S. Steel has operations. The only vocal opposition has come from the steelworkers’ union, which has said it doesn’t believe Nippon’s US$2.7-billion pledge will be used to keep jobs at unionized plants, pay for the worker benefits agreed to during collective bargaining, or protect U.S. steel production from cheap foreign imports, particularly from China. There have even been suggestions by the union that Nippon would use U.S. Steel, which would operate as a wholly owned subsidiary, as a conduit to spirit steel made in Japan into the U.S. marke
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