PITTSBURGH (TNS) —The foreign takeover of U.S. Steel by Japan’s Nippon Steel has the support of two major proxy firms, who last week encouraged shareholders to vote for the transaction.
According to a release from the Pittsburgh steelmaker, Institutional Shareholder Services and Glass Lewis & Co. support the $14.9 billion sale that was brokered last fall.
“There is no doubt that the offer represents a meaningful premium for shareholders resulting from a thorough and competitive sales process,” ISS wrote in a March 27 report, according to the release.
The firm noted that a competing bid from Ohio steelmaker Cleveland-Cliffs carried “considerable risk in obtaining antitrust approval.” It said U.S. Steel’s board was right to choose Nippon given its “commitments” to obtain regulatory approval.
Nippon’s proposed takeover has sparked a federal antitrust review, in addition to a federal review of the potential national security threat of a foreign takeover. President Joe Biden and Republican front-runner Donald Trump have opposed the sale.
In its own report last week, Glass Lewis found the bidding process was “suitably comprehensive and supportive of obtaining the greatest possible value for USS shareholders,” according to the release.
Previously released documents showed that process drove up the price Nippon and Cliffs were willing to pay.
Since losing out on the deal, Cliffs’ CEO Lourenco Goncalves has been publicly skeptical about Nippon’s chances of closing the deal and suggested Cliffs would come in to save the day, although with a new, lower bid.
“We’ll be on the other side when the deal unravels,” he said last week on Bloomberg TV.
A group of automakers that opposed Cliffs’ original bid last fall wrote again to the White House last week, reiterating concern that a Cliffs-U.S. Steel union would consolidate production and drive up the price of steel in the auto industry.
John Bozzella, CEO of the Alliance for Automotive Innovation, said Cliffs had actively “mobilized a campaign” against the Nippon deal.
U.S. Steel made no mention of Cliffs in its release, saying it was “pleased” with the conclusions of the two proxy firms.
The deal with Nippon, which shareholders will vote on April 12, will “advance American priorities by driving greater quality and competitiveness for customers in the critical industries that rely on American steel while strengthening American supply chains,” U.S. Steel said.
Nippon, meanwhile, has tried to sweeten the deal by making commitments to the United Steelworkers union, which has been critical since the sale was announced. Late last week, Nippon put some of those commitments in writing, multiple outlets reported, promising an additional $1.4 billion in capital spending and no layoffs through 2026, when the existing labor agreement expires, according to Bloomberg.
Nippon declined to confirm the commitments had been made.
