Will Biden Block the Japanese Purchase of a U.S. Steel Company?

President Biden poised to block Nippon Steel’s $15 billion takeover of U.S. Steel, citing national security concerns.

At a Glance

  • CFIUS reviewing Nippon Steel’s $15 billion bid for U.S. Steel, with decision due by December 22
  • U.S. Steel shares tumbled over 10% following reports of potential deal blockage
  • Biden administration emphasizes the importance of U.S. Steel remaining domestically owned
  • Nippon Steel criticizes political influence over national security considerations
  • Deal faces opposition from both Biden and Trump, citing national security risks

National Security Review Underway

The Committee on Foreign Investment in the United States (CFIUS) is conducting a national security review of Nippon Steel’s $15 billion bid to acquire U.S. Steel. This review, set to conclude by December 22, has sparked intense debate over the implications of foreign ownership in critical American industries. President Joe Biden is awaiting the outcome before making a final decision on whether to block the deal, highlighting the administration’s concerns about maintaining domestic control over strategic assets.

The potential blocking of this deal has already sent shockwaves through the market, with U.S. Steel shares plummeting over 10% following a Bloomberg report suggesting the merger might be halted. This reaction underscores the significant financial stakes involved and the market’s sensitivity to geopolitical considerations in major corporate transactions.

Political Opposition and National Security Concerns

Both the Biden administration and former President Trump have voiced strong opposition to the deal, citing potential risks to national security. The White House has made it clear that maintaining domestic ownership and operation of U.S. Steel is a priority. This bipartisan concern highlights the growing scrutiny of foreign investments in critical U.S. industries, especially those with implications for national defense and economic security.

CFIUS has warned that the deal could threaten the supply of steel for critical projects, raising alarm bells about the potential long-term consequences of foreign control over a key industrial asset. This concern aligns with broader efforts to protect and strengthen America’s industrial base, especially in sectors deemed vital for national security.

Nippon Steel’s Response and Promises

In response to the mounting opposition, Nippon Steel has criticized the influence of politics over national security interests, expressing confidence in the U.S. legal system to reach a fair conclusion. The Japanese company has made several promises in an attempt to allay concerns, including commitments not to transfer U.S. Steel production or jobs abroad and to refrain from interfering in trade matters.

In a move to win support, Nippon Steel has offered financial incentives to U.S. Steel employees, including a $5,000 payment to each worker if the deal closes, totaling nearly $100 million in payouts. This strategy aims to garner grassroots support and demonstrate the potential benefits of the merger to American workers.

Potential Legal Battle Looms

Both Nippon Steel and U.S. Steel have indicated their willingness to pursue litigation if the merger is blocked. U.S. Steel argues that the transaction should be approved based on its merits, citing strong support from various stakeholders. This sets the stage for a potential legal showdown that could have far-reaching implications for foreign investment in strategic U.S. industries.

RELATED ARTICLESMORE FROM AUTHOR