Biden blocks US Steel sale to Japanese buyer
President Joe Biden officially blocked Nippon Steel’s proposed $14.9 billion purchase of US Steel on Friday, citing national security concerns — dealing a potentially fatal blow to the contentious plan after a year of review.
The Committee on Foreign Investment in the US had punted on making a decision last month, leaving the issue up to Biden.
The president’s decision is a major use of executive power on a heavily-politicized election year issue. His announcement comes with just over two weeks left in his term. President-elect Donald Trump had vowed to crush the deal when he returns to office for his second term.
Despite the clear political pressures, Biden said his choice was based on national security concerns.
“It is my solemn responsibility as President to ensure that, now and long into the future, America has a strong domestically owned and operated steel industry that can continue to power our national sources of strength at home and abroad,” Biden said in a statement on Friday, “and it is a fulfillment of that responsibility to block foreign ownership of this vital American company.”
US Steel shares plunged more than 6% on Friday. The stock has fallen 36% over the past 52 weeks.
In a statement, Nippon and US Steel blasted Biden’s decision, calling it a “clear violation of due process” and a political move, and saying they would “take all appropriate action” to protect their legal rights.
Nippon Steel has previously threatened legal action if the deal was blocked. Lawyers have said Nippon Steel’s vow to mount a legal challenge against the US government would be tough.
White House spokesperson John Kirby defended the decision.
“This isn’t about Japan. This is about US steelmaking and keeping one of the largest steel producers in the United States an American-owned company,” Kirby said.
CFIUS had reached a stalemate on its review of the deal on concerns that Nippon’s large size and overseas mills might threaten US Steel’s own output, according to correspondence between the committee and Nippon Steel viewed by The Wall Street Journal.
Nippon’s offer, first announced in December 2023, immediately faced heat from politicians and union leaders.
Democratic and Republican lawmakers slammed the deal and treated it as a symbol of the erasure of US-owned companies.
The United Steelworkers union claimed it was blindsided by the merger, and argued Nippon was unlikely to honor the union’s contract and protect workers’ pensions.
US Steel shareholders approved the deal in April, but as the presidential election neared, political opposition to the bid only grew. Vice President Kamala Harris also spoke out against the deal during her campaign.
Meanwhile, US Steel warned that a failure to merge with the Japanese firm would put thousands of union jobs at risk. The US steelmaker would have to shutter some of its mills, and potentially move its headquarters out of key swing-state Pennsylvania, US Steel said in September.
Some of Biden’s senior advisers have expressed concerns that blocking the deal could hurt relations with Japan, a close ally and major investor in US businesses, according to The Washington Post.
In a November letter, Japanese Prime Minister Shigeru Ishiba urged Biden to sign off on the merger, according to Reuters. The prime minister’s office did not immediately respond to a request for comment.
Nippon had tried to ease US concerns, offering to move its US headquarters to Pittsburgh, where US Steel is based, and to honor all union agreements.
The Japanese steelmaker had also reportedly offered to give the US government veto power over any future cuts to US Steel’s production capacity, according to Reuters.
The collapse of the deal would cost Nippon a $565 million penalty, a likely detriment to future US investments.
Nippon hoped to raise its global output capacity to 85 million metric tons from 65 million through the merger.
