White House mum on Biden blocking US Steel sale to Japanese buyer
Anonymous officials cited as saying call to stop the deal has come despite contrary efforts by senior advisers
03 January 2025 - 11:44
byDavid Shepardson and Tim Kelly
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The US Capitol building in Washington, DC. Picture: BLOOMBERG
US President Joe Biden has decided to officially block Nippon Steel’s proposed $14.9-billion purchase of US Steel, a person familiar with the decision said on Friday, putting an end to a long-running and contentious merger plan.
The Committee on Foreign Investment in the US (CFIUS) had previously referred the decision to approve or block the deal to Biden, who will leave office on January 20.
Biden’s call to block the deal came despite contrary efforts by some senior advisers concerned it could hurt US-Japan relations, according to the Washington Post, which first reported the news.
The newspaper cited two administration officials who were not authorised to speak publicly about the matter.
The source who spoke to Reuters on condition of anonymity did not elaborate on the reason for the decision but had previously highlighted the political implications of a deal.
A White House spokesperson and a spokesperson for Nippon Steel both declined to comment on the reports.
US Steel directed Reuters to a statement earlier on Thursday saying it hoped “Biden will do the right thing and adhere to the law by approving a transaction that so clearly enhances US national and economic security.”
Nippon paid a hefty premium to clinch the purchase of the No 2 US steel producer in a December 2023 auction, but the deal faced opposition from the powerful United Steelworkers union (USW), as well as politicians.
Biden has said he wants US Steel to be domestically owned and run, while President-elect Donald Trump has vowed to block the deal after he takes office in January.
Japanese Prime Minister Shigeru Ishiba urged Biden to approve the merger to avoid marring recent efforts to strengthen ties between the two countries, Reuters reported in November.
Japan is a key US ally in the Indo-Pacific, where China’s economic and military rise has raised concerns in Washington, along with threats from North Korea.
It is also the biggest investor in the US and Keidanren, Japan’s key business lobby, has previously aired concerns that the review was facing political pressure.
Alistair Ramsey, vice-president of steel research at consultancy Rystad Energy, said blocking the deal may dissuade international investors from bidding for politically sensitive US companies with a unionised workforce in the short term.
“Big bids are a risky idea less than 12 months from a presidential election, but big steel producers with traditional operating furnaces, such as Nippon Steel, see the US as an excellent place to produce steel in the long term, despite the market depression there.
“Other mature regions, such as the EU or UK may wish to try to build a similar reputation to inspire these investments in future.”
The two companies had worked to assuage concerns over the merger. Nippon offered to move its US headquarters to Pittsburgh, where the US steelmaker is based, and promised to honour all agreements in place between US Steel and USW.
This week, a source familiar with the matter said Nippon Steel had also proposed giving the US government veto power over any potential cuts to US Steel’s production capacity, as part of its efforts to secure Biden’s approval.
“It is difficult to fully understand the risks involved in Nippon Steel’s potential acquisition of US Steel,” said a Japanese government official, who spoke on condition of anonymity, as did the other sources.
“Nippon Steel has done everything to eliminate risks related to economic securities, including committing not to reduce production.”
METI, Japan’s industry ministry, and a spokesperson for Ishiba could not be reached to seek comment on Friday, a public holiday in Japan.
Japan’s stock market was also closed for the holiday. US Steel shares closed down 4.1% on Thursday.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
White House mum on Biden blocking US Steel sale to Japanese buyer
Anonymous officials cited as saying call to stop the deal has come despite contrary efforts by senior advisers
US President Joe Biden has decided to officially block Nippon Steel’s proposed $14.9-billion purchase of US Steel, a person familiar with the decision said on Friday, putting an end to a long-running and contentious merger plan.
The Committee on Foreign Investment in the US (CFIUS) had previously referred the decision to approve or block the deal to Biden, who will leave office on January 20.
Biden’s call to block the deal came despite contrary efforts by some senior advisers concerned it could hurt US-Japan relations, according to the Washington Post, which first reported the news.
The newspaper cited two administration officials who were not authorised to speak publicly about the matter.
The source who spoke to Reuters on condition of anonymity did not elaborate on the reason for the decision but had previously highlighted the political implications of a deal.
A White House spokesperson and a spokesperson for Nippon Steel both declined to comment on the reports.
US Steel directed Reuters to a statement earlier on Thursday saying it hoped “Biden will do the right thing and adhere to the law by approving a transaction that so clearly enhances US national and economic security.”
Nippon paid a hefty premium to clinch the purchase of the No 2 US steel producer in a December 2023 auction, but the deal faced opposition from the powerful United Steelworkers union (USW), as well as politicians.
Biden has said he wants US Steel to be domestically owned and run, while President-elect Donald Trump has vowed to block the deal after he takes office in January.
Japanese Prime Minister Shigeru Ishiba urged Biden to approve the merger to avoid marring recent efforts to strengthen ties between the two countries, Reuters reported in November.
Japan is a key US ally in the Indo-Pacific, where China’s economic and military rise has raised concerns in Washington, along with threats from North Korea.
It is also the biggest investor in the US and Keidanren, Japan’s key business lobby, has previously aired concerns that the review was facing political pressure.
Alistair Ramsey, vice-president of steel research at consultancy Rystad Energy, said blocking the deal may dissuade international investors from bidding for politically sensitive US companies with a unionised workforce in the short term.
“Big bids are a risky idea less than 12 months from a presidential election, but big steel producers with traditional operating furnaces, such as Nippon Steel, see the US as an excellent place to produce steel in the long term, despite the market depression there.
“Other mature regions, such as the EU or UK may wish to try to build a similar reputation to inspire these investments in future.”
The two companies had worked to assuage concerns over the merger. Nippon offered to move its US headquarters to Pittsburgh, where the US steelmaker is based, and promised to honour all agreements in place between US Steel and USW.
This week, a source familiar with the matter said Nippon Steel had also proposed giving the US government veto power over any potential cuts to US Steel’s production capacity, as part of its efforts to secure Biden’s approval.
“It is difficult to fully understand the risks involved in Nippon Steel’s potential acquisition of US Steel,” said a Japanese government official, who spoke on condition of anonymity, as did the other sources.
“Nippon Steel has done everything to eliminate risks related to economic securities, including committing not to reduce production.”
METI, Japan’s industry ministry, and a spokesperson for Ishiba could not be reached to seek comment on Friday, a public holiday in Japan.
Japan’s stock market was also closed for the holiday. US Steel shares closed down 4.1% on Thursday.
Reuters
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