Japan PM Candidate Warns Biden's Opposition To Nippon's US Steel Acquisition Could 'Undermine The Trust Of Its Allies'

Author: Benzinga Neuro | September 06, 2024 05:45am

The potential decision by the U.S. to prevent Nippon Steel (OTC:NPSCY) from taking over U.S. Steel (NYSE:X) has sparked apprehension in Japan.

What Happened: The White House is said to be close to declaring that President Joe Biden will reject the $15 billion agreement on the grounds of national security.

Shigeru Ishiba, a leading candidate to become Japan’s next prime minister, expressed his concerns in a Reuters interview. He labeled the potential U.S. action as “very unsettling” and cautioned that it could “undermine the trust of its allies,” Reuters reported on Friday.

Taro Kono, another contender for Japan’s top position and the current digital minister, shared Ishiba’s views, stating that governments should not interfere in deals randomly.

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The proposed acquisition has been met with bipartisan resistance in the U.S. due to the impending presidential elections. A powerful labor union also opposes the takeover of Pennsylvania-based U.S. Steel.

Analysts are concerned that a veto of the deal could strain U.S.-Japan relations and affect future economic initiatives. Keidanren, Japan’s largest business lobby, has urged for a fair review process in the U.S.

Why It Matters: TThe Biden administration has reportedly warned that the acquisition could pose national security risks.

The U.S. Steelworkers president criticized U.S. Steel CEO David Burritt after the deal came under scrutiny from the Biden administration, suggesting that the Japanese steelmaker needs to revise its deal and the American company’s board should replace the CEO to win the union’s support.

A top Japanese official suggested that Biden’s expected veto of the U.S. Steel deal is a move to win “labor union votes.”

Price Action: U.S. Steel was trading 2.60% higher during Friday’s pre-market while Nippon Steel’s NPSCY closed 1.32% lower in the OTC market on Thursday, according to Benzinga Pro.

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This story was generated using Benzinga Neuro and edited by Pooja Rajkumari

Photo by Alec Issigonis on Shutterstock

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