In a recent revelation, it has come to light that Nippon Steel's ambitious attempt to acquire U.S. Steel has met with significant obstacles, primarily due to union opposition and national security concerns. Correspondence between Japanese executives and the United Steelworkers (USW) union sheds light on a nearly year-long courtship that ultimately failed to win the union's support.

Takahiro Mori, Nippon Steel's executive vice president, spent over a week trying to secure a meeting with David McCall, the USW boss, only to receive a disappointing response. McCall expressed his skepticism in an email on April 5, stating that a one-hour meeting between them would not address the fundamental issues with Nippon Steel's proposed acquisition of U.S. Steel.

From the outset, Nippon Steel had attempted to secure the union's support by making commitments such as guaranteeing the union's existing contract, ruling out layoffs or plant closures, and investing billions of dollars to modernize U.S. Steel's aging blast furnaces. However, these assurances failed to convince the union, leading to further strained negotiations.

The released correspondence, consisting of nearly two dozen pieces of communication, revealed a series of frustrations and misunderstandings between the Japanese executives and the union. Each side accused the other of misleading the public about their intentions, further exacerbating the already contentious talks.

Within these exchanges, Nippon Steel executives reiterated their legally binding commitments to preserve the union's existing contract, ensuring job security, benefits, and workplace rules. Despite these efforts, the union demanded additional assurances, leading Nippon Steel to believe that the union was not genuinely interested in making the deal work.

In response to what they deemed as public mischaracterizations of their communication and commitments, Nippon Steel shared the correspondence to shed light on their intentions and efforts to appease the union.

Union boss David McCall stated that the proposed merger jeopardized national security and critical supply chains. He accused Nippon Steel of attempting to hide behind a shell company and undermining their promises by adding numerous conditions, rendering them worthless. The political backdrop of the U.S. presidential campaign further shadowed the deal, as both President Joe Biden and Vice President Kamala Harris sought the union's support by affirming the importance of U.S. Steel remaining U.S.-owned.

Recently, the Committee on Foreign Investment in the United States (CFIUS) informed both Nippon Steel and U.S. Steel that the proposed transaction raised national security concerns, leading to doubts about the feasibility of mitigating these concerns through asset sales or other measures. The president is now expected to formally reject the deal, a decision that many independent analysts question.

In a last-ditch effort to salvage the transaction, Takahiro Mori and U.S. Steel CEO David Burritt are scheduled to meet with representatives from CFIUS. However, the odds of reversing the decision seem slim at this point.

The failed bid comes after months of negotiations, with Nippon Steel emphasizing the potential benefits of creating the world's third-largest steelmaker to compete with Chinese industry giants. They highlighted increased revenue and net income figures that indicated improved stability for union jobs. However, the union remained steadfast in their demands and skepticism.

As the future of the acquisition remains uncertain, it is evident that the opposition from the union and the national security concerns have proven insurmountable hurdles for Nippon Steel's aspirations to acquire U.S. Steel.