Nippon Steel has agreed to sell its stake in an Alabama mill in order to avoid potential antitrust snarls should its $14.1 billion attempted takeover of United States Steel prove successful.
Japan’s biggest steelmaker will offload its 50% holding in AM/NS Calvert to its joint-venture partner ArcelorMittal for $1, it said in a statement on Friday. The transaction is contingent on Nippon Steel getting the go-ahead to buy U.S. Steel, a deal that has faced political and union opposition.
"The share transfer aims to proactively address any antitrust concerns that may arise from Nippon Steel’s ongoing ownership in Calvert” after an acquisition of U.S. Steel, the Japanese company said.
The bid for U.S. Steel has been met with a ferocious political backlash, with President Joe Biden opposing it. However, a U.S. security panel granted Nippon Steel permission to refile its bid, pushing a final decision beyond the presidential election next month.
Regulators often order steelmakers to offload assets during acquisitions if the merger creates too much market dominance in a particular product. The Calvert plant makes steel sheets, including for the automotive sector, while U.S. Steel is also a major producer of auto steels.
Under the proposal, Nippon Steel would also inject cash and forgive ArcelorMittal on loans, amounting to around $900 million. The Japanese company will book about ¥230 billion in restructuring costs if the transaction goes ahead, it said.
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