JOSEPH S. PETE
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After nearly a year and a half Nippon Steel and U.S. Steel are moving forward with a merger.
President Donald Trump, who was weighing whether to allow or block the deal on national security grounds, announced a "planned partnership" between the two steelmakers on Friday Both U.S. Steel and Nippon Steed issued statements using the same partnership language instead of characterizing it as an acquisition.
A U.S. senator from Pennsylvania said the deal is structured to ensure American leadership and give the federal government a say, including over maintaining domestic production levels.
Senator David McCormick told CNBC's "Squawk Box" that the deal requires that U.S. Steed have an American CEO and that a majority of the members of its board of directors be American.
The federal government will get a "golden share" that will allow it to ensure production levels are not cut and limit the number of seats on the board, he said.
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"The structure of the deal is Nippon has agreed to invest $14 billion into U.S. Steel, including a minimum of $2.4 billion in Mon Valley outside of Pittsburgh," he said. "The control structure is going to be somewhat unique. It's a national security agreement signed with the U.S. government.
It will be a U.S. CEO, a U.S.-majority board and a golden share that will require U.S. government approval of the number of board members. That will allow the United States to ensure production levels aren't cut and things like that."
McCormick, who said he was briefed by the White House on the terms of the deal the day before it was announced on social media, told CNBC it would save 10,000 jobs in Pennsylvania, including 4,000 steelworker jobs. He said it would create another 4,000 building trades jobs to build a new arc furnace at Mon Valley Works.
"The steel industry is so important. Due to horrible trade agreements and lots of bad policy, we've lost a lot of our capability domestically," he said. "This structure allows us to get the investment, to get the next generation technology from Nippon Steel, which is a world leader, but also protect our national security interests. I don't think it's a model for every transaction."
John Fetterman, the other U.S. Senator from Pennsylvania, said the country got a better deal than was originally proposed when Nippon Steel put in a bid for U.S. Steel nearly 18 years ago.
"Vowed to jam that up almost a year and a half ago and we did. The original deal was a death sentence for Mon Valley steel. Nippon coughed up an extra $14B," he posted on X, formerly known as Twitter. "This is why we fight for the union way of life, and I will continue to support @steelworkers no matter the cause."
Gary spokeswoman Erika Blackwell said the city hoped it would see more than the $1 billion already promised in investments in Gary Works, given that Nippon Steel upped its promised investment in U.S. Steel from $1.4 billion initially to $2.7 billion last year to $14 billion. Gary Works is nearly 120 years old and has endured years of deferred maintenance.
Nippon Steel said it would make several investments, including by investing $300 million to reline Blast Furnace No. 14.
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