On Friday, President Joe Biden halted the $14 billion sale of US Steel to Japan’s Nippon Steel, citing national security concerns and raising new uncertainties for the historic American steelmaker.
“This deal would transfer one of the largest steel producers in the U.S. to foreign ownership, posing risks to national security and critical supply chains,” Biden said in a statement
Shares of Pittsburgh-based US Steel fell by more than 7% during morning trading.
In a joint statement, US Steel and Nippon Steel hinted at potential legal action following President Biden’s order, asserting that it lacked “any credible evidence of a national security issue” and was clearly “a political decision.”
“We are left with no choice but to take all appropriate measures to protect our legal rights,” the companies stated, adding that the decision sends “a chilling message to companies from U.S. allied nations considering significant investments in the United States.”
The 124-year-old US Steel devoted much of 2024 to lobbying the Biden administration for approval of its $14 billion merger with Nippon Steel, which would have granted the world’s fourth-largest steelmaker a foothold in the U.S. market.
While the Japanese company pledged to preserve the US Steel name and maintain its Pittsburgh headquarters, it failed to alleviate concerns about potential impacts on union workers, domestic supply chains, and national security.
The United Steelworkers union firmly opposed the deal, contending it would be detrimental to steelworkers and harmful to the U.S. steel industry.
Biden was public about his opposition to the deal last year while he was still running for president. President-elect Donald Trump also opposed the acquisition and also vowed to block the deal. The Committee on Foreign Investment in the United States (CFIUS), a federal interagency panel, spent months reviewing the acquisition for national security risks and was reportedly unable to reach a consensus before sending a report about the matter to Biden. In his new executive order issued Friday, Biden is requiring the companies to abandon the deal in 30 days unless the date is extended by CFIUS. It’s unclear if US Steel would look to find a new buyer. “It’s been a highly politicized process,” Josh Spoores, CRU North American steel analyst, told Yahoo Finance. US Steel and Nippon on Friday repeated the commitments they had made previously, including new investments in US Steel plants and ensuring that key directors and executives would be US citizens. “The record before CFIUS is abundantly clear that this transaction, with the commitments made by Nippon Steel, would strengthen, not weaken, national security” the companies said in their joint statement. “Yet, it is clear that the CFIUS process was deeply corrupted by politics, and the outcome was pre-determined, without an investigation on the merits, but to satisfy the political objectives of the Biden White House.”
