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US Steel CEO defends plan to sell to Japan's Nippon, says deal will be made on its merits

US Steel CEO defends plan to sell to Japan's Nippon, says deal will be made on its merits
US Steel CEO defends plan to sell to Japan's Nippon, says deal will be made on its merits

 


U.S. Steel CEO David Burritt on Tuesday defended the company's proposed sale to Japan's Nippon Steel, expressing confidence the deal will go through despite fierce opposition from President Joe Biden.

“We believe the deal is done on its merits,” Burritt said in an interview on CNBC's “Money Movers.” “It strengthens national security, economic security and job security.”

Biden has publicly pledged that U.S. Steel will remain an American company. Two people familiar with the matter told NBC News earlier this month that the president was preparing to formally block the $14.9 billion sale. Vice President Kamala Harris and former President Donald Trump also oppose the deal.

“We have to remember that Nippon North America has been doing business here for 50 years and while it may seem sexy that it remains the same company, we cannot succeed without Nippon,” Burritt said.

He said the deal would save jobs and cited as an example Nippon's commitment to invest $2.7 billion in struggling U.S. Steel plants. Asked why U.S. Steel couldn't make those investments, Burritt said the company had an obligation to its shareholders.

“It's a question of resource allocation,” Burritt said. “They're about three times the size of us. They also have the best research and development and the best technology in the industry when it comes to integrated plants.”

“Our priorities would be different,” Burritt said. “Our priorities would not be to invest in these securities, because we have to decide where we can get the best returns, because ultimately we have a fiduciary duty to our shareholders.”

The sale is currently under review by the Committee on Foreign Investment in the United States, a body that studies the national security implications of transactions by foreign entities. Burritt said he expected a decision to be made after the U.S. presidential election in November.

CFIUS told Nippon that the sale could “lead to a reduction in domestic steel production capacity,” according to a letter obtained by Reuters earlier this month. The committee said supply chains could be disrupted in sectors critical to national security such as transportation, infrastructure, construction and agriculture.

Burritt dismissed potential national security concerns Tuesday: “With this deal that could be signed, they will adhere to the trade laws of the United States,” he said.

“It will be run by American citizens and there will be a board of directors that…will be largely composed of American citizens as well,” Burritt said.

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