U.S. President Joe Biden on Friday followed through on his promise to block Nippon Steel’s $14.9 billion bid for U.S. Steel, citing concerns that the deal could harm national security.
The long-awaited move cuts a critical capital lifeline for the embattled American icon, which has said it would have to close its main factories without the nearly $3 billion in investment promised by the company Japanese.
It also represents the last chapter as part of a high-profile national security review, led by the Committee on Foreign Investment in the United States (CFIUS), which screens investments for national security risks and had until December 23. approveextend the deadline or recommend that Biden block the deal.
The proposed rapprochement has faced high-level opposition in the United States since its announcement a year ago, both from Biden and his new successor Donald Trump. aim as they sought to appeal to union voters in the swing state of Pennsylvania, where US Steel is headquartered. Both Trump and Biden have said the company should remain under American control.
Both companies had sought to allay concerns about the merger. Nippon proposed moving its US headquarters to Pittsburgh, where the American steelmaker is based, and promised to honor all existing agreements between US Steel and USW.
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Merger looked set to stall after companies receive deal Letter of August 31 of CFIUS, seen by Reuters, saying the deal could harm 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 country, would actually boost US Steel’s production, and obtained a 90-day extension of the review. The extension gave CFIUS until after the November election to make a decision, fueling hope among supporters that a calmer political climate could help get the deal approved.
But hopes were dashed in December when CFIUS setting the stage for Biden to block in a 29-page letter citing allegedly unresolved national security risks, Reuters exclusively reported.
In November, Japanese Prime Minister Shigeru Ishiba urged Biden to approve the merger to avoid spoiling recent efforts to strengthen ties between the two countries, Reuters exclusively reported.
A spokesperson for Ishiba could not be reached for comment Friday ahead of Biden’s statement. Japan is a key U.S. ally in the Indo-Pacific region, where China’s growing economic and military power has sparked concerns in Washington, as well as threats from North Korea.
Nippon Steel aimed to increase its global production capacity to 85 million tonnes per year from the current 65 million, moving closer to its long-term goal of increasing capacity to 100 million tonnes.
US Steel has previously said the failure of the deal would jeopardize thousands of jobs and could be forced to close some steel mills, a claim the USW union called baseless threats and intimidation.