U.S. Steel CEO David Burritt on Tuesday defended the company’s planned sale to Japan’s Nippon Steel, expressing confidence that the deal will “close on its merits” despite President Joe Biden’s vocal opposition.
“We strongly believe the deal closes on its merits,” Burritt said in an interview on CNBC’s “Money Movers.” “It strengthens national security, it strengthens economic security and it strengthens job security.”
Biden has publicly vowed that U.S. Steel will remain American-owned. Two people familiar with the matter told NBC News earlier this month that the president is preparing to formally block the $14.9 billion sale. Vice President Kamala Harris and former President Donald Trump also both oppose the sale.
“We have to remember that Nippon North America has been doing business here for 50 years and while it may sound sexy for it to be a company that stays the same, we won’t be able to succeed without Nippon,” Burritt said.
He said the transaction would save jobs, and pointed to Nippon’s commitment to invest $2.7 billion in U.S. Steel’s struggling mills as an example. When asked why U.S. Steel cannot make these investments, Burritt said the company has an obligation to shareholders.
“It’s about resource allocation,” Burritt said. “They’re about three times our size. They also have the best R&D and technology in the industry as it relates to integrated mills.”
“Our priorities would be different,” Burritt said. “Our priorities would not invest in these because we have to decide where we can get the best returns, because at the end of the day we have a fiduciary obligation to our stockholders.”
The sale is currently under review by the Committee on Foreign Investment in the United States, a body that reviews the national security implications of transactions by foreign entities. Burritt said he expects a decision to come 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 agreement that could be signed, they will adhere to the trade laws in the United States,” he said.
“It’s going to be run by U.S. citizens and there will be a board of directors that … is largely U.S. citizens as well,” Burritt said.