Japan's Nippon Steel Vows to Protect ‘Legal Rights’ After Biden Blocks It From Buying US Steel
Almost 10 months after announcing he would oppose the proposed acquisition of U.S. Steel Corp. by Japan-based Nippon Steel Corp. (see 2403140049), President Joe Biden issued a formal order Jan. 3 blocking the deal, saying he continues to believe the 124-year-old American steelmaker should remain in domestic hands. Nippon Steel criticized the decision and hinted it will challenge it in court.
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“We need major U.S. companies representing the major share of US steelmaking capacity to keep leading the fight on behalf of America’s national interests,” Biden said in a statement. “As a committee of national security and trade experts across the executive branch determined, this acquisition would place one of America’s largest steel producers under foreign control and create risk for our national security and our critical supply chains.”
Biden’s action came less than two weeks after U.S. Steel said it was notified that the Committee on Foreign Investment in the U.S. had been unable to reach a consensus on the acquisition and had referred the matter to Biden to make a decision (see 2412240035).
Nippon Steel said Biden’s move violates due process and the law governing CFIUS. "The president’s statement and order do not present any credible evidence of a national security issue, making clear that this was a political decision," the company said. As a result, the firm believes it is “left with no choice but to take all appropriate action to protect our legal rights.”
Nippon Steel said it offered various commitments to address potential national security concerns about the deal, including having the chief executive officer, the chief financial officer and a majority of the board of directors at U.S. Steel be U.S. citizens, having three independent directors approved by CFIUS, barring any Nippon Steel involvement in trade measures proposed by U.S. Steel, and prohibiting the transfer of any production and jobs outside the U.S. “However, CFIUS did not give due consideration to a single mitigation proposal offered by the Parties, as evidenced by the absence of any written feedback to the four robust national security agreements that the Parties proactively offered over 100 days,” the company said.
Nippon Steel also said it's "shocking -- and deeply troubling -- that the U.S. government would reject a pro-competitive transaction that advances U.S. interests and [would] treat an ally like Japan in this way." It added that the decision will send a “chilling message” to other companies in U.S. allied countries that are considering investment in the U.S.
United Steelworkers International President David McCall, who opposed the acquisition, defended the Biden administration's review of the transaction, saying "the president and CFIUS have taken a considerable amount of time going through this whole deal." Nippon Steel and U.S. Steel "have had lots of access to the CFIUS committee and to the administration about how they would mitigate some of these concerns," McCall told reporters. "So I think everybody's done everything they can."
In Congress, acquisition opponents, including outgoing Sen. Sherrod Brown, D-Ohio, and Sen. John Fetterman, D-Pa., welcomed Biden’s announcement, saying it will protect American jobs from cuts they expected Nippon Steel to make. Acquisition proponents, such as Rep. Dan Meuser, R-Pa., argued that Biden's decision means U.S. Steel will lose investment it needs to modernize its plants and stay competitive.
While President-elect Donald Trump has come out against the deal (see 2412030033), Meuser said he hopes Trump changes his mind. But McCall doesn't see that happening. "I don't have any concerns" that Trump might reverse Biden's order, McCall said.
Nippon Steel and U.S. Steel announced the $14.9 billion deal in December 2023, saying that combining their technologies and manufacturing capabilities would allow them to better serve their customers (see 2312200056).