U.S. Steel's CEO warned that the company may close steel mills and potentially move its headquarters out of Pittsburgh if its planned sale to Nippon Steel falls through, the Wall Street Journal reported Wednesday.
David Burritt, the steelmaker’s Chief Executive since 2017, emphasized that the nearly $3 billion investment Nippon Steel has committed to upgrading U.S. Steel’s aging mills is vital for keeping them competitive and protecting jobs.
“We wouldn’t do that if the deal falls through,” Burritt told the WSJ. “I don’t have the money.”
Burritt’s bleak outlook comes in the wake of comments from Democratic presidential nominee Kamala Harris, who stated that U.S. Steel should remain under domestic ownership.
President Biden, Republican nominee Donald Trump, and several members of Congress have also expressed opposition to the $14.1 billion deal, which is also being challenged by the United Steelworkers union.
While Harris did not explicitly say she would block the transaction, her remarks are seen as another potential roadblock if the regulatory review extends into a new administration. This follows similar concerns raised by President Biden earlier in the year.
Shares of U.S. Steel fell 6% on Tuesday, closing at $35.60.
U.S. Steel is set to rally employees on Wednesday at its Pittsburgh headquarters to promote the benefits of the Nippon Steel deal. For months, Nippon Steel has been lobbying elected officials and union leaders in an effort to gain support for the acquisition and the investments it has pledged. However, opposition from political and labor leaders remains firm.
Nippon Steel, the fourth-largest steelmaker globally by production, recently increased its investment commitment for U.S. Steel’s aging mills to $2.7 billion and promised no layoffs of hourly workers through 2026.
U.S. Steel has faced financial challenges, losing money for the decade leading up to 2020 due to rising costs and low steel prices. Maintenance and upgrades to its mills were delayed as the company focused on cutting costs to manage its losses.
Burritt also mentioned that the expansion of the Arkansas mill would allow U.S. Steel to close its Mon Valley operation, the last steelmaking facility in Pittsburgh.
“If that mill won’t make it to the next decade, why would we stay there?” Burritt said, adding that with more production shifting to the South, the company would likely relocate its headquarters to that region as well.
Nippon Steel’s $55-a-share cash offer for U.S. Steel outbid Cleveland-Cliffs’ cash-and-stock proposal. U.S. Steel shareholders approved the Nippon Steel offer earlier this year.