Joe Biden has blocked a $14.9bn bid by Japan’s Nippon Steel for US Steel, citing concerns the deal could hurt national security and following through on a pledge to keep the steelmaker domestically owned as he prepares to depart the White House.
The two companies said they would take all “appropriate action to protect their legal rights”, with Nippon Steel reportedly preparing to sue the US government.
“US Steel will remain a proud American company – one that’s American-owned, American-operated, by American union steelworkers – the best in the world,” the US president said in a statement.
Japan’s industry minister, Yoji Muto, described Biden’s decision to block the sale as “incomprehensible and regrettable”.
The anticipated move cuts off a critical lifeline of capital for the beleaguered American icon. US Steel, which sought to argue the deal would enhance, not hinder, US national security, has warned it would have to idle key mills without the nearly $3bn in promised investment from its Japanese suitor.
Shares in US Steel dropped 7% in New York.
The Nikkei business daily reported that Nippon Steel had decided to file a lawsuit against the US government, challenging the appropriateness of the procedures by which Biden blocked its acquisition. Nippon Steel did immediately respond to a request for comment on the report.
Biden announced his decision in the final weeks of his presidency, following a lengthy national security review into the deal, led by the Committee on Foreign Investment in the United States (CFIUS), which vets investment for national security risks and had until 23 December to approve, extend the timeline or recommend that Biden block the deal.
“We need major US companies representing the major share of US steelmaking capacity to keep leading the fight on behalf of America’s national interests,” Biden said.
The deal “would place one of America’s largest steel producers under foreign control and create risk for our national security and our critical supply chains”, he added, noting that steel plays an important role in US infrastructure and large industries, like automotive and defense. “Without domestic steel production and domestic steel workers, our nation is less strong and less secure.”
US Steel – the second-largest steel producer in the US – had argued that the takeover would, in fact, strengthen US national and economic security by helping to combat the competitive threat posed by China.
But the proposed sales faced high-level political opposition within the United States, with both Biden and his incoming successor, Donald Trump, taking aim at it as they sought to woo union voters in the swing state of Pennsylvania – home to US Steel, which is based in Pittsburgh. Trump and Biden had both insisted the company should remain in American hands.
The influential United Steelworkers union was also highly critical of the deal, claiming that US Steel’s “first and only priority” was “short-term financial gain” for its shareholders. Welcoming the decision, its president, David McCall, declared he had “no doubt” it was the right choice.
Biden’s announcement draws a line under a protracted debate over the future of US Steel. Its sale to Nippon Steel had been appeared on track to be blocked last summer, when the CFIUS concluded that the sale could hurt the supply of steel needed for critical transportation, construction and agriculture projects. But Nippon Steel countered that its investments, made by a company from an allied nation, would shore up US Steel’s output, and it won a 90-day review extension.
This extension pushed the ultimate decision beyond November’s election, fueling optimism among those advocating for the takeover that a calmer political climate might improve its prospects.
Such hopes were dashed last month, however, when the CFIUS set the stage for Biden to block it in a 29-page letter that listed alleged unresolved national security risks, Reuters reported.
In his statement, Biden said the decision “reflects my unflinching commitment to utilize all authorities available to me as president to defend US national security, including by ensuring that American companies continue to play a central role in sectors that are critical for our national security”.
His remarks were similar to those of Trump, who was re-elected on bold promises to protect American workers’ jobs and consumers from rising prices amid nationalist threats to impose steep tariffs on countries including Mexico, Canada and China he has blamed for hurting US industry.
Reuters contributed reporting
