By Yuka Obayashi and Katya Golubkova
TOKYO (Reuters) -Nippon Steel, Japan’s biggest steelmaker, said on Thursday its proposed acquisition of U.S. Steel fits with President Donald Trump’s goal of a stronger United States as the leaders of the two allies prepared to meet.
Nippon Steel’s bid for U.S. Steel, key to the Japanese company’s global expansion plan, was blocked last month by then-U.S. President Joe Biden, citing national security. Together with U.S. Steel, it filed a number of lawsuits challenging Biden’s decision.
The merger became highly politicized ahead of the November U.S. presidential election, with both Democrat Biden and Republican Trump pledging to kill it off as they wooed voters in the swing state of Pennsylvania where U.S. Steel is headquartered.
Nevertheless the bid “contributes to Trump’s goals of promoting U.S. investment, creating U.S. jobs, and strengthening U.S. manufacturing through new investment and advanced technology transfer,” Nippon Steel said in a statement, while adding there was no guarantee that the transaction would be closed.
“We are convinced that our acquisition plan is the best proposal for U.S. Steel, and I hope that the (Japan Prime Minister Shigeru) Ishiba-Trump meeting will convey that to Trump and open the way for a deal,” Takahiro Mori, Nippon Steel’s vice chairman, told reporters on Thursday.
“If Trump fully understands that, I believe he might reconsider his position,” Mori said.
Trump and Ishiba are expected to meet at the White House on Friday. Mori said he visited the U.S. last week but declined to say whether he met any members of Trump’s administration.
With the proposed deal, the world’s No.4 steelmaker would be aiming to boost its global crude steel output capacity to more than 100 million metric tons in the longer term.
Aside from the U.S. where it is already present, Nippon Steel wants to expand further in India and Southeast Asia, where it expects demand for steel to grow and where some nations have tariff protection measures in place to limit imports, including from China.
Nippon Steel said on Thursday its April-December net profit dropped 18% to 362 billion yen ($2.4 billion) amid sluggish steel demand in Japan and overseas.
“Increases in exports due to the expanded structural supply/demand gap in China continues to cause global spreads weakness,” Nippon Steel said. “In Japan, while the pressure by imported materials is high, sluggish demand for steel is becoming more serious than expected.”
Nippon Steel also said it planned to sell all 10.7 million shares it holds in Kobe Steel, with the latter expected to do the same with the 6.7 million Nippon Steel shares it owns.
($1 = 152.4600 yen)
(Reporting by Katya Golubkova and Yuka Obayashi; Editing by Himani Sarkar, Muralikumar Anantharaman and Kate Mayberry)
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