Nippon Steel’s $15 billion bid for U.S. Steel has been referred to U.S. President Joe Biden, according to a White House spokesperson. This referral gives Biden 15 days to make a decision on the merger, which he has previously expressed opposition to.
Key Highlights:
CFIUS Referral:
The Committee on Foreign Investment in the United States (CFIUS), responsible for reviewing foreign investments for national security risks, could not reach a consensus on the deal and has passed it to Biden.
Decision Deadline:
Biden must act within 15 days to block the deal. If he takes no action, the merger may proceed unexpectedly.
Political Context:
The referral occurs before President-elect Donald Trump takes office on January 20, 2025. Trump has also opposed the merger, which was first announced in December 2023.
Statements from Companies:
Nippon Steel urged Biden to consider the steps taken to address national security concerns and their commitments to expand U.S. Steel.
U.S. Steel expressed hope that Biden would approve the transaction, highlighting its benefits for U.S. national and economic security.
Potential Penalties:
If the deal fails, Nippon Steel faces a $565 million penalty to U.S. Steel and has indicated the possibility of pursuing legal action against the U.S. government.
Strategic Goals:
Nippon Steel aims to increase its global steel production capacity from 65 million to 85 million metric tons per year, with long-term goals of exceeding 100 million tons.
Market Context:
The U.S. is experiencing rising domestic steel demand, with the highest global steel prices due to insufficient production capacity. This scenario presents U.S. Steel as a unique opportunity for Nippon Steel, according to SBI Securities analyst Ryunosuke Shibata.