WASHINGTON: President Joe Biden plans to formally block the US$14.1bil sale of United States Steel Corp to Nippon Steel Corp on national security grounds once the deal is referred back to him later this month, people familiar with the matter say.
The Committee on Foreign Investment in the United States (CFIUS) panel, which has been reviewing the proposed takeover for much of this year, must refer its decision to Biden by Dec 22 or 23, said the people, who asked to not to be identified discussing a confidential process.
It’s not clear exactly what the CFIUS review will say. However, any referral to the President suggests at least one member of the panel sees the deal posing a risk.
Nippon Steel and US Steel are poised to pursue litigation over the process if Biden decides to block the merger, some of the people said.
The fate of the once-fabled US steelmaker has become a hot political issue since the company reached an agreement to be taken over by its Japanese suitor almost a year ago.
US Steel has said the deal represents a lifeline and warned it may move its headquarters out of Pennsylvania and shutter some operations if the merger collapses.
Biden, born in US Steel’s home state of Pennsylvania, has long signalled opposition to the sale, and has said the company would remain domestically owned.
At the same time, he has stopped short of a pledge to kill the deal, while President-elect Donald Trump has promised repeatedly to block it.
“The President’s position since the beginning is that it is vital for US Steel to be domestically-owned and operated,” White House spokesperson Saloni Sharma said. “The CFIUS process was and remains ongoing.”
Shares of US Steel tumbled as much as 22% and closed 9.7% lower at US$35.26.
“This transaction should be approved on its merits,” company spokeswoman Amanda Malkowski said.
“It is inappropriate that politics continue to outweigh true national security interests, especially with the indispensable alliance between the US and Japan as the important foundation,” Nippon Steel said in a statement.
“Nippon Steel still has confidence in the justice and fairness of America and its legal system, and if necessary, will work with US Steel to consider and take all available measures to reach a fair conclusion.”
Despite the political pressures swirling around the deal, Nippon Steel has worked for months to build support.
The company announced separately on Tuesday a plan to offer a US$5,000 bonus to every US Steel worker if the takeover closes.
The CFIUS process was extended in September with a procedural manoeuvre. That pushed the referral deadline to this month and raised questions about whether the deal might proceed after the election, even as Biden dug in.
“I haven’t changed my mind,” he said on Sept 27. — Bloomberg
