The White House confirmed on Tuesday that a national security review of Nippon Steel’s $15 billion bid for U.S. Steel is still in progress. President Joe Biden will await the results of this review before deciding whether to block the acquisition, although he has expressed opposition to the deal.
Key Highlights:
Market Reaction:
Following a Bloomberg report suggesting a likely block of the deal, U.S. Steel shares fell by more than 10% on Tuesday afternoon.
CFIUS Review:
The Committee on Foreign Investment in the United States (CFIUS) has until December 22 to determine whether to approve, block, or extend the review period for the transaction.
White House Position:
Saloni Sharma, a White House spokesperson, reiterated that Biden believes it is essential for U.S. Steel to remain domestically owned and operated. She stated, “The CFIUS process was and remains ongoing,” and emphasized that no recommendation has yet been received.
Nippon Steel’s Response:
Nippon Steel criticized the ongoing political influence over the review, asserting that it undermines genuine national security interests. The company remains confident in the fairness of the U.S. legal system and is prepared to collaborate with U.S. Steel to reach a fair resolution.
U.S. Steel’s Advocacy:
U.S. Steel has urged for the approval of the deal, highlighting strong community and employee support. The company stated, “The benefits are overwhelmingly clear,” and expressed commitment to the rule of law.
Negotiation Efforts:
Takahiro Mori, Nippon Steel’s vice chairman, is scheduled to return to the U.S. for further discussions about the merger, marking his ninth visit since the announcement.
Potential Litigation:
Should Biden decide to block the merger, both companies are prepared to pursue litigation regarding the decision.
Opposition to the Deal:
The acquisition has faced significant opposition, including from the United Steelworkers union (USW), with both Biden and Donald Trump indicating intentions to block it. CFIUS previously warned that the deal could pose national security risks by affecting steel supplies critical for infrastructure.
Incentives for Workers:
To gain support from workers, Nippon Steel announced plans to provide $5,000 bonuses to U.S. Steel employees if the deal is approved, along with 3,000 euro ($3,150) bonuses for European employees, totaling nearly $100 million in payments.