In a surprising move, U.S. President Joe Biden has decided to block Nippon Steel’s $14.9 billion bid to take over U.S. Steel. The decision, first reported by The Washington Post on Friday, comes after careful review by U.S. officials. The White House is expected to make an official announcement soon.
The deal, which has been under scrutiny for months, was referred to Biden by the Committee on Foreign Investment in the United States (CFIUS) after they failed to reach a consensus. This happened just before Christmas on December 23. Biden had a 15-day window to decide whether to approve or block the deal, which led Nippon Steel to extend the deal’s deadline into the first quarter of 2025, giving them more time to address concerns.
So, why the pushback? The CFIUS raised concerns that Nippon Steel could cut U.S. Steel’s production capacity after the takeover, which could hurt national security. In simpler terms, if U.S. Steel’s output dropped, it could cause shortages of steel in industries that are crucial to the country’s security.
To ease those concerns, Nippon Steel offered the U.S. government the power to veto any cuts to steel production. They also promised to keep U.S. Steel’s headquarters in Pittsburgh, Pennsylvania, and ensure that the company’s board would be filled with U.S. citizens. Despite these offers, Biden remained firm in his stance, emphasizing that U.S. Steel should stay an American company, owned and operated domestically. He has been vocal about his opposition to the deal, even stating back in March that the steel giant’s American roots were essential for national security.
Interestingly, former President Donald Trump also spoke out against the acquisition, voicing concerns about U.S. Steel being bought by a foreign company like Nippon Steel. In a social media post, he called the move a threat to the once-great U.S. Steel, which has deep ties to American industry.
The deal had received support from U.S. Steel’s shareholders, who voted in favor of the acquisition back in April. U.S. Steel President and CEO David B. Burritt said that the overwhelming support showed the shareholders recognized the potential benefits of the deal.
But despite these efforts, Biden’s decision stands firm. Nippon Steel’s shares in Japan saw a small increase after the news broke, but the future of this high-stakes deal remains uncertain.
This decision highlights the delicate balance between global business deals and national security concerns. Stay tuned as this story continues to unfold.
