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Biden to Block Nippon Steel's Proposed Takeover of US Steel

Too bad, I was looking forward to getting me some US-made Hattori Hanzo 'steel' katana (jk).

This is just more of same reflexive "populist" protectionist thinking, and a play for union bosses and votes - Trump, of course, is also against the friendly merger.

The offer of $14B is way higher than the company is currently worth (~$6B, excluding debt) and could easily be worth less in its current sorry shape in a very competitive environment, because they don't have the capital to modernize and automate the plants.

For comparison, Indian company ArcelorMittal, registered and headquartered in Luxembourg, is worth only $17B with revenues 4x of US Steel.
Korean POSCO is worth only $19B with revenues of 3.5x of US Steel.

6 Chinese companies are in top 10; 3 of them in top 5, at #1, #3, #5 with combined production of 209 tonnes. Nippon Steel is at #4 with 44 tonnes, US Steel at #24 2ith 16 tonnes.

Two large (S&P500) US steel companies, Nucor and Steel Dynamics combined have 3x revenues of US Steel, and there is a number of slightly smaller and specialized US steel companies.

How are them steel and aluminum tariffs working?

|------- May 14, 2024: "President Biden Takes Action to Protect American Workers and Businesses
To encourage China to eliminate its unfair trade practices regarding technology transfer, intellectual property, and innovation, the President is directing increases in tariffs across strategic sectors such as steel and aluminum, semiconductors, electric vehicles, batteries, critical minerals, solar cells, ship-to-shore cranes, and medical products.

Steel and Aluminum
The tariff rate on certain steel and aluminum products under Section 301 will increase from 0 " 7.5% to 25% in 2024. ...
-------|

At one point, very long time ago, US Steel was one of the most valued companies / stocks in the US, and was broadly owned by almost everyone who owned stocks and/or as part of pension funds. Today, it's not even in Russell 3000 index of companies (representing approximately 95% of US equity market).

If ever there have been any "wealthy owners" holding on to the stock (NYSE:X), they are much less "wealthy" today. **

Altogether, today US steel companies are producing more than double of total raw and processed material than 30 years ago, with smaller labor force, due to automation.

This is not some "national security crisis" both Trump and Biden/Harris are trying to portray. It's not even "outsourcing" - the plants stay here and would be revitalized. US Steel Corporation is a "legacy" company, not vital for US security or "steel independence," and Nippon Steel ownership would only strengthen financial and production viability of the company and therefore increase its relevance as a reliable supplier and partner to US security needs / MIC.

Nippon Steel also promised not to move the plants or lay off USS workers or cut benefits / pensions, as a direct result of acquisition - things that will certainly happen if it's blocked. Just look at the 'wonderful' results seen already amid ongoing closures and employment losses in two "American" industries in the aftermath of Shawn Fine's ("Detroit") and "Hollywood" strikes less than a year ago.

** "Hyman Roth" (Meyer Lansky): "Michael, we are bigger than US Steel!"
__________

__________
Biden to Block Nippon Steel's Proposed Takeover of US Steel

Too bad, I was looking forward to getting me some US-made Hattori Hanzo 'steel' katana (jk).

This is just more of same reflexive "populist" protectionist thinking, and a play for union bosses and votes - Trump, of course, is also against the friendly merger.

The offer of $14B is way higher than the company is currently worth (~$6B, excluding debt) and could easily be worth less in its current sorry shape in a very competitive environment, because they don't have the capital to modernize and automate the plants.

For comparison, Indian company ArcelorMittal, registered and headquartered in Luxembourg, is worth only $17B with revenues 4x of US Steel.
Korean POSCO is worth only $19B with revenues of 3.5x of US Steel.

6 Chinese companies are in top 10; 3 of them in top 5, at #1, #3, #5 with combined production of 209 tonnes. Nippon Steel is at #4 with 44 tonnes, US Steel at #24 2ith 16 tonnes.

Two large (S&P500) US steel companies, Nucor and Steel Dynamics combined have 3x revenues of US Steel, and there is a number of slightly smaller and specialized US steel companies.

How are them steel and aluminum tariffs working?

|------- May 14, 2024: "President Biden Takes Action to Protect American Workers and Businesses
To encourage China to eliminate its unfair trade practices regarding technology transfer, intellectual property, and innovation, the President is directing increases in tariffs across strategic sectors such as steel and aluminum, semiconductors, electric vehicles, batteries, critical minerals, solar cells, ship-to-shore cranes, and medical products.

Steel and Aluminum
The tariff rate on certain steel and aluminum products under Section 301 will increase from 0 - 7.5% to 25% in 2024. ...
-------|

At one point, very long time ago, US Steel was one of the most valued companies / stocks in the US, and was broadly owned by almost everyone who owned stocks and/or as part of pension funds. Today, it's not even in Russell 3000 index of companies (representing approximately 95% of US equity market).

If ever there have been any "wealthy owners" holding on to the stock (NYSE:X), they are much less "wealthy" today. **

Altogether, today US steel companies are producing more than double of total raw and processed material than 30 years ago, with smaller labor force, due to automation.

This is not some "national security crisis" both Trump and Biden/Harris are trying to portray. It's not even "outsourcing" - the plants stay here and would be revitalized. US Steel Corporation is a "legacy" company, not vital for US security or "steel independence," and Nippon Steel ownership would only strengthen financial and production viability of the company and therefore increase its relevance as a reliable supplier and partner to US security needs / MIC.

Nippon Steel also promised not to move the plants or lay off USS workers or cut benefits / pensions, as a direct result of acquisition - things that will certainly happen if it's blocked. Just look at the 'wonderful' results seen already amid ongoing closures and employment losses in two "American" industries in the aftermath of Shawn Fine's ("Detroit") and "Hollywood" strikes less than a year ago.

** "Hyman Roth" (Meyer Lansky): "Michael, we are bigger than US Steel!"
__________

__________
#10 | Posted by SpeakSoftly at 2024-09-05 05:07 PM
#9 | Posted by oneironaut : If Biden was really interested in bringing back Manufacturing, seems like this deal would be approved.

- - - You obviously didn't read the IRA bill or else you'd have no doubts about that.

First, it's a non sequitur, he was specifically referring to blocking the Nippon Steel's very generous bailout of US Steel, which lost money in 13 of the last 15 years, has a lot of debt so it's not capable to recapitalize, modernize and be competitive on its own with much larger and stronger companies, in the US or elsewhere. This kind of opportunity to help US manufacturer and save "good-paying" jobs doesn't come often, and not only doesn't even cost anything but brings capital to the US, so rejecting it says more about Biden (and Trump) caring more about union bosses (who are against buyout) than actual domestic manufacturing, jobs, or attracting FDI in the US. IRA has absolutely nothing to do with this case.

Second, spending $Billions of "other people's money" on what some may describe as "manufacturing" - as part of so-called "industrial policy" - doesn't, in and of itself, bring in or stimulate actual manufacturing. Lack of factories was not the reason for supposed lack of manufacturing in the US.

Even Paul Krugman of NYT acknowledged that IRA didn't fund actual manufacturing - it would require much more "additional" funding - IOW, building large empty structures/"factories" we didn't need with the money we don't have (and would have to borrow, thus increasing deficits and debt) with no obvious payout, doesn't address the costs and needs of the US manufacturing; i.e., it's simply a continuation of same inflationary "demand-side" economy that we've just experienced. That's why "industrial policy" spectacularly failed in the countries that tried it - most notably, Japan in the '80s and '90s, China's failing "Silk Road" and "ghost cities" since Xi Jinping came to power, Soviet Union's "5-year plans" etc. etc.