Nippon-US Steel Deal Is 'Partnership' in Name Only, Panelists Say
Although the Trump administration is calling the recently announced deal between Japan-based Nippon Steel and U.S. Steel (see 2505290058) a "partnership," it’s still a traditional acquisition that includes a national security agreement with the Committee on Foreign Investment in the U.S., panelists said this week.
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“I think the partnership is just PR, right? It's spin,” Sarah Bauerle Danzman, senior nonresident fellow with the Atlantic Council, said during an event hosted by the Stimson Center. “Unless we get real information that the structure of the deal has changed, it's still an acquisition.”
Jeffrey Bialos, a lawyer with Eversheds Sutherland and former Pentagon and Commerce Department officials, also said the deal appears to be a traditional foreign investment acquisition. It likely includes a CFIUS mitigation deal that could require the U.S. government to approve the appointment of certain directors, he said, along with other conditions. Bialos said he was skeptical about those details being released.
“I think partnership is a spin, and you'll see something along the lines of traditional mitigation agreement,” he said. “How much of that gets out remains to be seen. Maybe there'll be hearings that will come out. It'll be very interesting.”
Although the deal likely has a national security agreement, both Bauerle Danzman and Bialos said the acquisition doesn’t appear to present obvious national security risks. Bauerle Danzman cautioned the U.S. against using CFIUS to intervene in deals that don’t clearly impact national security. She pointed to the fact that some countries, including France, have used their investment screening tools more for industrial policy purposes as opposed to clear national security protection goals.
“CFIUS is not supposed to impose mitigation terms on a transaction unless it finds a national security risk to the transaction,” she said. “And I don't think that that is good for the U.S. in the long term.”