U.S. Steel's board released a letter Tuesday that took the unusual step of directly accusing rival Cleveland-Cliffs of a "long-running misinformation campaign" and seeking to "correct the record."
Cleveland-Cliffs CEO Lourenco Goncalves has repeatedly disparaged the deal, and recently asserted that "there is no way to close the sale of U.S. Steel without agreement and full support" from the United Steelworkers (USW) union.
Cleveland-Cliffs, which previously made a lower bid for U.S. Steel that was rejected, continues to weigh in on the situation because of its support from USW.
Of the union's roughly 850,000 members, around 14,000 are employed by Cleveland-Cliffs, more than the roughly 10,000 at U.S. Steel. Cleveland-Cliffs asserts that the USW said from the outset that it would not support any other buyer for the company.
U.S. Steel's unusually direct public counter comes amid signs that this wrangling is starting to have broader consequences.
Typically, unions do not have much say in acquisitions. Nippon Steel could still go through with the acquisition against the USW's wishes if it is prepared to face the risk of labor disputes and legal challenges. With shareholders having signed off, the deal is now just awaiting review by regulators including the Committee on Foreign Investment in the U.S. (CFIUS).
But a source who has analyzed the negotiations argues that the CFIUS review will not move forward without USW support.
"The USW problem is no longer just a union problem," a Nippon Steel executive said.
This dynamic ties into the looming presidential election in November. Presumptive Republican candidate Donald Trump has come out against the deal, and President Joe Biden has made skeptical comments as well. Given the USW's staunch opposition to the acquisition, both candidates worry about the risk of alienating unions, a key voting bloc, if they speak out against them.
Nippon Steel has so far been stuck on the back foot.
The comments from the USW, Biden and Trump have made market players increasingly skeptical that the acquisition will close. While U.S. Steel stock had climbed above $49 after the announcement of Nippon Steel's $55-per-share tender offer, it has sunk back down to around $36, where it sat before the deal.
The Japanese company is making an effort to appeal to the public to regain its footing.
Last month, Nippon Steel and U.S. Steel put up airport and bus stop ads in Washington declaring that "a stronger America is made here," in a bid to win over dubious lawmakers. The campaign is believed to have been timed to coincide with Japanese Prime Minister Fumio Kishida's visit to the U.S., as well as a special meeting of U.S. Steel shareholders regarding the Nippon Steel offer.
The top of U.S. Steel's website prominently features its logo next to that of Nippon Steel, above the phrase "moving forward together as the best steelmaker." This links to a site made specifically to advocate for the acquisition, featuring separate pages explaining the benefits to different groups, including customers, investors, local communities and employees.
With the upcoming election making the sale a political issue, Nippon Steel has been ramping up lobbying as well. It retained lobbyists in December, and signed a new contract this month with lobbyists close to Trump's camp.
When a senator last month voiced security concerns related to Nippon Steel's China operations based on a report from a research firm, the company said the document contained false information. A corrected version came out within days, likely amid lobbying efforts.
Nippon Steel Executive Vice President Takahiro Mori, who leads the negotiations, is currently in the U.S. The trip is not expected to yield concrete progress, but is intended to "help move things forward," a Nippon Steel executive said.
Mori has met with officials in Pennsylvania, U.S. Steel's home state, as well as the company's employees to exchange views on the situation. The USW has reportedly declined Nippon Steel's requests for a face-to-face meeting.