The deal faces opposition from unions and concerns over national security risks
\n Washington DC
\nThe $15 billion bid by Japan\u2019s Nippon Steel for US Steel has been referred to President Joe Biden for a final decision, a White House spokesperson confirmed.
\nThe Committee on Foreign Investment in the United States (CFIUS), which reviews foreign investments for national security risks, could not reach a consensus on the deal and passed it on to Biden, giving him 15 days to block the merger.
\nIf Biden does not take action, the deal could proceed despite his previous opposition.
\nCFIUS, which has been reviewing the proposed acquisition, raised concerns about potential risks to national security, specifically the possibility of reduced domestic steel production, which it views as critical to infrastructure and defense.
\nThe committee\u2019s assessment was detailed in a letter sent earlier this week, stating that allowing Nippon Steel to take over U.S. Steel might hurt the supply of steel for key transportation, construction, and agricultural projects.
\nNippon Steel has proposed remedies to address these concerns, including appointing U.S. citizens to senior management and board positions at U.S. Steel. However, CFIUS was divided on whether these steps would effectively mitigate the national security risks.
\nRyunosuke Shibata, an analyst at SBI Securities, described U.S. Steel as \u201ca once-in-a-lifetime opportunity\u201d for Nippon Steel, pointing to the increasing demand for domestic steel in the U.S. and high global steel prices driven by production shortfalls. The U.S. is currently the only developed nation where domestic steel demand is on the rise.
\nThe opposition to the deal has been significant, with both President Biden and former President Donald Trump criticizing the merger, particularly as it relates to union voters in Pennsylvania, where U.S. Steel is headquartered.
\nThe president of the United Steelworkers Union has also voiced strong opposition to the deal.
\nNick Wall, M&A partner at Allen & Overy, noted the uncertainty surrounding Biden\u2019s decision, stating, \u201cThe question is, what will Biden\u2019s decision be? And I think that\u2019s still very unpredictable. He\u2019s got nothing really to lose.\u201d
\nDespite the opposition, Nippon Steel made a strong case during the 90-day review process, arguing that its investment, as a company from an allied nation, would enhance U.S. Steel\u2019s output.
\nIn a letter sent to CFIUS, Nippon Steel stated that its involvement would bolster U.S. steel production, helping to secure the country\u2019s industrial capacity.
\nHowever, CFIUS sent a 29-page letter last weekend, which Reuters exclusively reported, outlining unresolved national security concerns. This raised doubts about the deal\u2019s future. Nippon Steel and U.S. Steel responded with a follow-up letter, claiming that Biden had \u201cimpermissible influence\u201d over the review process and threatened legal action if the deal were blocked.
\nA White House spokeswoman, Saloni Sharma, confirmed that the evaluation from CFIUS would be reviewed by President Biden. \u201cWe received the CFIUS evaluation and the President will review it,\u201d she said.
\nIf the deal fails to gain approval, Nippon Steel will face a penalty of $565 million under the terms of the agreement. Nippon Steel has previously indicated that it could take legal action against the U.S. government should the merger be blocked.
\nNippon Steel\u2019s goal with the acquisition is to increase its global steel production capacity from 65 million tons to 85 million tons per year. The deal is central to its long-term objective of raising production to more than 100 million tons annually.<\/p>\n","protected":false},"excerpt":{"rendered":"
The deal faces opposition from unions and concerns over national security risks Washington DC The $15 billion bid by Japan\u2019s Nippon Steel for US Steel has been referred to President Joe Biden for a final decision, a White House spokesperson confirmed. The Committee on Foreign Investment in the United States (CFIUS), which reviews foreign investments […]<\/p>\n","protected":false},"author":2,"featured_media":451501,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[],"class_list":{"0":"post-451489","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-world"},"yoast_head":"\n