President Joe Biden made it clear on Thursday that he opposes the $14.9 billion acquisition of U.S. Steel Corp by Japan’s Nippon Steel. He emphasized the importance of U.S. Steel remaining an American company, stating that it has been an iconic American steel company for over a century. This marks the first time that Biden has explicitly expressed his opposition to the deal.
The Committee on Foreign Investment in the United States (CFIUS) has the power to recommend the deal be blocked on national security grounds. The White House has previously stated that the proposed acquisition warrants serious scrutiny due to U.S. Steel’s core role in steel production, which is critical to national security. This raises concerns about the potential impact of the acquisition on U.S. national security interests.
Response from Nippon Steel
Nippon Steel has responded to Biden’s opposition by stating that the acquisition would deliver clear benefits to U.S. Steel, union workers, the broader American steel industry, and American national security. The Japanese firm is progressing through the regulatory review process, including CFIUS, and is committed to completing the transaction while following the rule of law and due process expected from the U.S. Government.
Following Biden’s statement, shares of U.S. Steel experienced a decline, dropping 18% over two days to $38.26. This is significantly below the proposed deal price of $55 per share. Cleveland-Cliffs CEO Lourenco Goncalves has expressed interest in making another bid for United States Steel if the deal with Nippon Steel falls through, potentially offering no more than $30 per share.
The opposition to the deal by the U.S. has the potential to overshadow an upcoming summit between President Biden and Japanese Prime Minister Fumio Kishida. The summit aims to strengthen the security alliance between the two countries in response to increasing Chinese influence. Biden’s stance on the acquisition could have broader geopolitical implications and may impact the relationship between the U.S. and Japan.
President Biden’s opposition to the deal has garnered support from United Steelworkers International President David McCall, who emphasized the importance of maintaining U.S.-owned steel companies for national security and critical infrastructure needs. Biden’s outreach to labor unions highlights his commitment to supporting workers and addressing their concerns in key industries such as steel production.
President Biden’s rejection of Nippon Steel’s acquisition of U.S. Steel Corp underscores the broader implications of foreign investments in critical industries. The ongoing regulatory review process and potential intervention by CFIUS highlight the importance of safeguarding national security interests in strategic sectors like steel production. The outcome of this deal will not only impact the companies involved but also have implications for U.S. economic and national security interests in the long run.