U.S. Steel stock falls after Harris says it should stay American owned

Shares in U.S. Steel (X) fell around 6% in Tuesday premarket trading after Vice President Kamala Harris voiced her opposition to Nippon Steel’s proposed acquisition of the U.S. steelmaker, joining a growing list of prominent critics of the deal that was first announced in December.

During a Labor Day visit to Pittsburgh with President Biden, Harris, the Democratic presidential candidate, commended the administration’s achievements for union members and their families.

At a campaign rally held in a union hall, Harris said that U.S. Steel should remain under American ownership and operation, aligning with President Biden's earlier expressed views.

Back in March, Biden hinted at his disapproval of Nippon Steel’s $14.1 billion bid for U.S. Steel, though he stopped short of explicitly stating he would block the transaction.

Former President Donald Trump, the Republican nominee, has also stated that he would halt the deal if he returns to office. Furthermore, several lawmakers, including Republican vice presidential nominee Sen. JD Vance, have expressed their opposition.

Harris’s remarks come as her broader campaign agenda begins to take form.

“U.S. Steel is a historic American company and it is vital for our nation to maintain strong American steel companies,” she stated.

The United Steelworkers union has consistently opposed the agreement with Nippon Steel, arguing that the Japanese company has not offered sufficient assurances regarding the continued operation of unionized mills and the honoring of existing contracts.

Nippon Steel has committed to upholding the union contract, which is in place until 2026, and has pledged not to implement layoffs during the current contract period. Moreover, Nippon Steel has promised significant investments in U.S. Steel’s aging facilities in Gary, Indiana, and near Pittsburgh.

Last week, the company nearly doubled its investment commitments for U.S. Steel’s oldest plants to $2.7 billion, a move intended to alleviate concerns among workers and local leaders about potential mill closures.

U.S. Steel executives have acknowledged that the company cannot match Nippon Steel’s proposed investment levels. The company has already reduced its workforce by thousands in recent years through plant closures, which has strained its relationship with the union.

U.S. Steel remains committed to its deal with Nippon Steel, with its shareholders having approved the $55-per-share cash offer earlier this year.

The Pittsburgh-based steelmaker spent months considering various potential buyers. Although a competing bid from Cleveland-Cliffs received support from the steelworkers union, U.S. Steel ultimately rejected it.

The Justice Department is currently conducting an antitrust review of Nippon Steel's proposed acquisition. Also, the deal is undergoing a national security review by the Committee on Foreign Investment in the U.S., which has the authority to recommend that the president block the transaction.

Source: Investing.com