In a significant move on Friday, President Joe Biden intervened to block United States Steel's proposed acquisition by Japan's Nippon Steel, highlighting the importance of national security and supply chain stability. During the announcement, Biden emphasized, "A strong domestically owned and operated steel industry represents an essential national security priority and is critical for resilient supply chains." He further elaborated that without a robust domestic steel production base and skilled American steel workers, the nation is undermined in its strength and security. The deal, originally valued at $14.1 billion, which included cash alongside the assumption of US Steel's debts, was initially set to close in the second half of 2024.
However, as reported on Nippon’s website, the timeline was moved forward to the current quarter late December. Notably, President-elect Donald Trump had previously expressed intentions to obstruct this transaction. Recently, the Committee on Foreign Investment in the United States (CFIUS) referred the matter to Biden after it failed to reach a consensus on whether to approve the acquisition.
In a bid to gain Biden's acceptance, it is reported that Nippon proposed offering the U.S. government a veto right to forestall any reductions in production capacity at US Steel's operations. Biden’s stance was clear: "It is my solemn responsibility as President to ensure that, now and long into the future, America has a strong domestically owned and operated steel industry that can continue to power our national sources of strength at home and abroad; and it is a fulfillment of that responsibility to block foreign ownership of this vital American company." Despite the position taken by the administration, neither US Steel nor Nippon Steel provided comments in response to inquiries from MT Newswires.
Following the announcement, US Steel’s stock fell by 5.9% on Friday. Nippon Steel had initially pledged a substantial investment of $2.7 billion in US Steel's unionized plants. However, this proposal was met with resistance from the United Steelworkers union. The union stated, "Nippon says it will allow capacity to be monitored, but it fails to commit to maintaining production for the long term or actually strengthening domestic capacity in integrated facilities." In a response to MT Newswires, US Steel rebutted the union's claims, asserting that the union leaders misrepresented various elements of Nippon Steel's proposal, maintaining that the transaction was "the best way to ensure" the future success of US Steel and its workforce.
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