(Bloomberg) -- Japan’s Digital Transformation Minister Kono Taro pushed back against a possible US move to block Nippon Steel Corp.’s $14.1 billion takeover of United States Steel Corp., describing government intervention in the case as inappropriate.
“I think they’re looking for labor union votes ahead of the US presidential race,” said Kono, himself a leading candidate in an election later this month to decide Japan’s leader. “But I hope the US won’t distort the markets for reasons like this.”
President Joe Biden is preparing to block the deal, Bloomberg reported, with a decision potentially coming as early as this week. The proposed acquisition has been caught in an election year maelstrom, with both Democrats and Republicans vying for support in a crucial swing state. The turmoil risks straining US relations with one of its top allies.
Kono, a former foreign and defense minister, made the comment as he laid out his policy platform in the runup to the Sept. 27 ruling party leadership vote. Whoever wins that election is virtually assured of taking over from Fumio Kishida as Japan’s next premier thanks to the Liberal Democratic Party’s dominance in parliament.
“Raising productivity, efficiency through corporate buyouts should have merits for both the buyer and the seller,” said Kono. “In principle, intentional intervention from governments shouldn’t happen.”
Biden has long pledged that US Steel, an iconic American company headquartered in Pittsburgh, should remain domestically owned and run, a stance with which Vice President Kamala Harris, the Democratic presidential nominee, is also aligned.
Government officials in Japan have argued that the deal is simply a matter for the companies to decide.
The US is a free market economy like Japan, so many things are decided by the market, Kono said.
“There may be national security factors, environmental factors or workers’ human rights factors” that may supercede market principles, Kono said. “But I do feel it’s a little questionable whether this US Steel takeover case is an example of that.”
Kono is among a slew of candidates raising their hands for Japan’s top job. The list currently includes former Defense Minister Shigeru Ishiba, ex-Environment Minister Shinjiro Koizumi and party heavyweight Toshimitsu Motegi. Sanae Takaichi, who is seeking to become Japan’s first female prime minister, is expected to formally announce her candidacy next week.
The latest public polls show Kono coming in fourth in popularity behind Ishiba, Koizumi and Takaichi among the general public. The leadership contest will be decided by the ruling party, not by a public vote.
Speaking immediately after Kono, Motegi also laid out his policy platform but refrained from commenting specifically on the US Steel case.
Motegi said it’s necessary to strengthen economic ties with the US. If he becomes prime minister, he said he would need to discuss the takeover issue with the US.
--With assistance from Yui Hasebe.
(Updates with more details, Motegi response.)
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