Biden Administration Expected to Block Nippon Steel’s Acquisition of U.S. Steel

Biden Administration Poised to Block Nippon Steel’s Acquisition of U.S. Steel

In a significant move, President Biden is reportedly preparing to thwart an attempt by Japan’s Nippon Steel to acquire U.S. Steel on grounds of national security. This anticipated action is based on insights from three individuals familiar with the situation and is likely to derail a merger that has become heavily intertwined with the political landscape in an election year.

The Committee on Foreign Investment in the United States (CFIUS) has been diligently examining the potential risks associated with the deal. A White House official informed The New York Times that CFIUS has yet to provide a recommendation to the president, which is the next crucial step in the review process.

CFIUS comprises members from several key departments, including State, Defense, Justice, Commerce, Energy, and Homeland Security, and is chaired by Treasury Secretary Janet L. Yellen.

The proposed $15 billion deal, which was announced last December, has drawn considerable scrutiny from the Biden administration, along with various lawmakers expressing concerns about the implications of selling a vital U.S. steel producer to a foreign entity. Critics have warned that such a transaction could lead to the potential relocation of U.S. Steel jobs and production overseas.

The Steelworkers Union has been a vocal opponent of the acquisition, highlighting its importance in Pennsylvania, a crucial swing state in the upcoming presidential election. President Biden has previously stated that U.S. Steel should remain under American ownership, echoing sentiments expressed by former President Donald J. Trump, who also indicated he would block the sale. Vice President Kamala Harris reinforced this stance over the weekend, asserting that the iconic steel company should remain American-owned.

Following reports from The Washington Post and The Financial Times regarding the expected decision, shares of U.S. Steel plummeted by 23 percent on Wednesday. A representative from Nippon Steel declined to comment on the situation, while U.S. Steel’s spokesperson did not respond promptly to requests for comments.

In a show of support for the acquisition, employees of U.S. Steel rallied at the company’s headquarters on Wednesday. David B. Burritt, the company’s CEO, stated, “Today’s rally is about displaying support for the transaction with Nippon Steel. We want elected leaders and other key decision-makers to recognize the benefits of the deal as well as the unavoidable consequences if the deal fails.”

Legal experts specializing in international mergers and acquisitions have pointed out that blocking such a deal could be perceived as overtly political and might tarnish America’s reputation for maintaining open markets. John Kabealo, a Washington-based attorney who focuses on cross-border transactions, remarked, “The U.S. will lose all standing to argue that foreign direct investment screening regimes around the world should not be politicized.”

This is a developing story. Check back for updates.