White House Signaling It will Likely Stop Nippon Steel’s Plans to Buy US Steel

AP

9:55 JST, September 5, 2024

WASHINGTON (AP) — The White House is signaling an openness to blocking the acquisition of U.S. Steel by Nippon Steel, as a government review of the proposed takeover by the Japanese company is on the cusp of ending.

The Washington Post reported Wednesday that President Joe Biden plans to stop the deal from going forward. A White House official, insisting on anonymity to discuss the matter, did not deny the report and said Biden still needs to receive the official recommendation from the Committee on Foreign Investment in the United States. That review could end as soon as this month.

Biden had already voiced his objections to the merger, backing his supporters in the United Steelworkers union who oppose the deal. The objection carries weight as U.S. Steel is headquartered in the swing state of Pennsylvania and is a symbol of Pittsburgh’s industrial might in an election year where Republicans and Democrats alike are promising more domestic manufacturing jobs.

Vice President Kamala Harris, the Democratic nominee, came out against the deal this week. Former President Donald Trump, the Republican nominee, already said he would block the merger if he was still in the White House.

Stock in U.S. Steel fell roughly 17% on the news that Biden would stop the merger.

The CFIUS review process generally pertains to business issues with national security implications. U.S. Steel spokesperson Amanda Malkowski said in an email that the company had not received any update on the process and that the company sees “no national security issues associated with this transaction, as Japan is one of our most staunch allies.”

“We fully expect to pursue all possible options under the law to ensure this transaction, which is best future for Pennsylvania, American steelmaking, and all of our stakeholders, closes,” Malkowski said.

A spokesman representing Nippon Steel said the company had not received any updates from the federal government on the review process.

Tucker Elcock, who works for the advisory firm Teneo, said on behalf of Nippon Steel that it was the “only willing and able” company that could make an investment in U.S. Steel that put the entire sector on a “stronger footing.” He added that Nippon Steel “strongly believes that the U. S. government should appropriately handle procedures on this matter in accordance with the law.”

U.S. Steel on Wednesday hosted a rally in support of the acquisition. It said in a statement that without the Nippon Steel deal the company would “largely pivot away from its blast furnace facilities, putting thousands of good-paying union jobs at risk, negatively impacting numerous communities across the locations where its facilities exist, and depriving the American steel industry of an opportunity to better compete on the global stage.”

Nippon Steel announced the deal in December 2023 and U.S. Steel shareholders approved it in April of this year.