The CEO of U.S. Steel is warning that the company will likely have to close steel mills if its pending $14 billion acquisition by Nippon Steel falls through.
U.S. Steel CEO David Burritt told The Wall Street Journal in an interview that Nippon Steel's pledge to invest $3 billion to update U.S. Steel's Mon Valley Works in Pittsburgh and a mill in Gary, Indiana, is needed for the company to be economically competitive and to keep workers employed. Burritt said the investment won't happen if the deal collapses.
"We wouldn't do that if the deal falls through," Burritt told the Journal about the investment. "I don't have the money."
Burritt's comments come as Vice President Kamala Harris, the Democratic presidential nominee, announced her opposition to the proposed merger on Monday – aligning her views with President Biden. Harris' electoral rival, former President Trump, said in February that he would block the proposed merger if elected. The United Steelworkers union has also opposed the deal.
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U.S. Steel and Nippon Steel announced the $14.9 billion deal in December. Nippon, which is based in Japan, has previously invested in and operated steel facilities in the U.S. and said it plans to retain the company's name, brand and headquarters if the deal is completed.
Nippon also said that the transaction wouldn't trigger plant closures or any layoffs through 2026. Last week, the company said it would nearly double its investment in revitalizing U.S. Steel's Mon Valley and Gary steel mills to $2.7 billion in the coming years.
Burritt told the Journal that if U.S. Steel closes the Mon Valley Works, it would likely move its corporate headquarters from Pittsburgh to the South where more of its production has shifted and said, "If that mill won't make it to the next decade, why would we stay there?"
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The Biden-Harris administration's Justice Department is conducting an antitrust review of the proposed deal and the Committee on Foreign Investment in the U.S. (CFIUS) is looking at the national security implications of the deal given Nippon Steel is a Japan-based company.
Nippon pushed back the expected closing date for the deal from September to December due to the ongoing reviews.
Burritt told the Journal that the opposition to the U.S. Steel-Nippon Steel merger is "puzzling and confusing" given the investment it would bring to the aging Mon Valley and Gary mills. The company plans to rally employees at its Pittsburgh headquarters on Wednesday in support of the deal.
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U.S. Steel told FOX Business that the company has about 3,800 employees in Pennsylvania, including the Mon Valley Works and the corporate headquarters, as well as its research center and other corporate functions. The Gary Works in Indiana has over 4,300 employees.
Last year, the company turned down a $7.3 billion bid by Cleveland Cliffs to buy the company and cited concerns about market concentration in terms of steel supplied to the auto industry and domestic supplies of iron ore that could've raised regulatory issues.
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U.S. Steel shareholders voted to approve the $14.9 billion deal with Nippon Steel in April, with 98% of the voted shares in support of the deal.
