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Joe Biden blocks Nippon Steel’s bid to purchase US Steel Joe Biden blocks Nippon Steel’s $14.9bn bid to purchase US Steel
(about 1 hour later)
President Biden said the $14.9bn deal could hurt national security President cites national security concerns as he follows through on pledge to keep steelmaker domestically owned
US president Joe Biden on Friday followed through on his pledge to block Nippon Steel’s $14.9bn bid for US Steel, citing concerns the deal could hurt national security. Joe Biden blocked a $14.9bn bid by Japan’s Nippon Steel for US Steel on Friday, 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.
“US Steel will remain a proud American company – one that’s American-owned, American-operated, by American union steelworkers – the best in the world,” Biden said in a statement. “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.
The move, long expected, cuts off a critical lifeline of capital for the beleaguered American icon, which has said it would have to idle key mills without the nearly $3bn in promised investment from the Japanese firm. 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.
It also represents the final chapter in a high-profile national security review, 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. US Steel and Nippon Steel did not immediately respond to requests for comment. Shares in US Steel dropped 7% in New York.
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.“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.
Biden added: “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.” 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.”
The proposed tie-up has faced high-level opposition within the United States since it was announced a year ago, 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, where US Steel is headquartered. Trump and Biden both asserted the company should remain American-owned. 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 combat the competitive threat posed by China.
The merger appeared to be on the fast track to be blocked after the companies received a 31 August letter from the CFIUS, seen by Reuters, arguing the deal could hurt the supply of steel needed for critical transportation, construction and agriculture projects. 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.
But Nippon Steel countered that its investments, made by a company from an allied nation, would in fact shore up US Steel’s output, and it won a 90-day review extension. That extension gave the CFIUS until after the November election to make a decision, fueling hope among supporters that a calmer political climate could help the deal’s approval. 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.
But hopes were shattered in December when the CFIUS set the stage for Biden to block it in a 29-page letter by raising allegedly unresolved national security risks, Reuters exclusively reported. Biden’s announcement draws a line under a protracted debated 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 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.
In the White House statement, Biden struck a tone of economic nationalism that is resonant of Donald Trump – his Republican opponent in last year’s US presidential election before Biden dropped out over concerns about his age and mental acuity. 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.
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“Today’s action 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. As I have made clear since day one: I will never hesitate to act to protect the security of this nation and its infrastructure as well as the resilience of its supply chains,” Biden said. 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.
Trump eventually beat Biden’s vice-president, Kamala Harris, in November’s poll and is now the US president-elect. He has maintained his stance on American economic nationalism, especially by threatening to impose tariffs on other countries, and sparked global fears of an international trade war. Trump takes office later this month and returns to the White House for his second term. In his statement on Friday morning, 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 reportingReuters contributed reporting