Nippon's $15 billion bet faces major setback
Happy Friday!
Bringing you a late edition of my weekly deals newsletter, DealTalk. The next edition of the newsletter will be published on Sept 20, as yours truly will be on the road next week.
This week, my colleague Alexandra Alper was first to report that the U.S. government informed Nippon Steel that its proposed $14.9 billion takeover of U.S. Steel would create national security risks because it could hurt the supply of steel needed for critical transportation, construction and agriculture projects.
The letter from the U.S., which was sent to the companies and seen by Reuters, also cited a global glut of cheap Chinese steel, and said that under Nippon, a Japanese company, U.S. Steel would be less likely to seek tariffs on foreign steel importers.
The Committee on Foreign Investment in the U.S. (CFIUS) said in its 17-page letter sent on Saturday to Nippon Steel and U.S. Steel, and first reported by Reuters, that decisions by Nippon could "lead to a reduction in domestic steel production capacity."
CFIUS added: "While U.S. Steel frequently petitions for (trade) relief, Nippon Steel features prominently as a foreign respondent resisting trade relief for the U.S. domestic steel industry."
The letter provided a first glimpse of the national security grounds that the Biden administration could use as a basis for its expected move to block the merger, even as the companies and many industry experts questioned the strength of the arguments.
Elsewhere, team Reuters stayed on top of the latest developments at Intel – Max Cherney and Milana Vinn scooped that Intel CEO Pat Gelsinger and key executives are expected to present a plan later this month to the company’s board of directors to slice off unnecessary businesses and revamp capital spending, as they try to revive the once-dominant chipmaker's fortunes.
The plan will include ideas on how to shave overall costs by selling businesses, including its programmable chip unit Altera, that Intel can no longer afford to fund from the company’s once-sizeable profit.
Gelsinger and other high-ranking executives at Intel are expected to present the plan at a mid-September board meeting.
Details of Gelsinger's proposal have not been reported previously.
The proposal does not yet include plans to split Intel and sell off its contract manufacturing operation, or foundry, to a buyer such as Taiwan Semiconductor Manufacturing Co., according to the source and another person familiar with the matter.
Max also was first to report that Intel's contract manufacturing business has suffered a setback after tests with chipmaker Broadcom failed, dealing a blow to the company's turnaround efforts.
Yours truly teamed up with Max, Milana and Mike Spector to report that Qualcomm has explored the possibility of acquiring portions of Intel's design business to boost the company's product portfolio.
Qualcomm has not approached Intel about a potential acquisition of its parts and it may choose not to. Intel is "deeply committed to our PC business," a company spokesperson said.
Milana and I also reported that French workplace supplies provider Elis SA has approached Vestis, the former uniform rentals business of Aramark, with an acquisition offer. Elis confirmed our scoop earlier on Friday.
Milana also had an awesome scoop on a consortium including Vista and Blackstone being in talks to acquire Smartsheet, a U.S. maker of workplace collaboration software with a market value of about $7 billion.
And last but not the least, Svea Herbst-Bayliss was first to report that hedge fund Starboard Value has filed a shareholder resolution to do away with the dual-class shares that allow Rupert Murdoch to control News Corp, the publisher of the Wall Street Journal.
Starboard's move comes as the 93-year-old media tycoon is locked in a legal dispute with some of his children to try to ensure that his son Lachlan Murdoch will control News Corp and broadcasting giant Fox Corp after his death.
Starboard's resolution would not be binding on News Corp, and the company could try to stop it from being voted on at its next annual meeting of shareholders.
Still, the move represents a direct challenge to Murdoch's grip on the media conglomerate. While he has overcome such challenges in the past, it is the first he faces since he stepped away from an active role at the company by standing down as board chair last year.
And here’s the best of the rest of the Reuters corporate finance file:
领英推荐
One of the frontrunners to become Japan's next premier said on Friday that any U.S. move to block Japan's Nippon Steel from buying U.S. Steel on national security grounds would be "very unsettling" and could dent trust between the allies.
The Biden administration told Nippon Steel in a letter on Saturday its $14.9 billion acquisition of U.S. Steel would pose a national security risk by harming the American steel industry, three people said, adding to evidence the U.S. is poised to block it.
Japanese firms are set to scrutinize overseas deals more intently after U.S. resistance to Nippon Steel's $15 billion U.S. Steel purchase, advisers said.
Safe Superintelligence (SSI), newly co-founded by OpenAI's former chief scientist Ilya Sutskever, has raised $1 billion in cash to help develop safe artificial intelligence systems that far surpass human capabilities, company executives told Reuters.
Elliott Investment Management now holds 10% of Southwest Airlines' common stock, crossing the threshold that allows the hedge fund to call a special meeting at the carrier, according to a person familiar with the matter.
Proxy advisory firm Institutional Shareholder Services on Friday recommended Squarespace investors vote against a proposed take-private transaction by private equity company Permira later this month.
Hedge fund Davidson Kempner will close one of its funds amid a tougher environment for hedge funds that buy into the debt of distressed companies hoping to make money from their comeback, a letter sent to investors and seen by Reuters on Friday shows.
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Have a terrific weekend!
Best,
Anirban
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Anirban Sen
Editor in Charge, U.S. Mergers & Acquisitions
Reuters News
Thomson Reuters
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