US President Joe Biden plans to formally block the US$14.1 billion (R$85 billion) sale of US Steel to Nippon Steel on national security grounds, once the deal is forwarded to him in the end this month, according to sources familiar with the matter.
The Committee on Foreign Investment in the United States (CFIUS), which has been reviewing the acquisition proposal for much of this year, is expected to forward its decision to Biden by December 22 or 23, said the sources, who asked for not be identified when discussing a confidential process.
It’s unclear exactly what the CFIUS analysis will say. However, any referral to the president suggests that at least one member of the panel sees the deal as a risk. Nippon Steel and US Steel are prepared to go to court if Biden decides to block the merger, some of the sources said.
The White House and Treasury Department declined to comment. “This transaction must be approved based on its merits,” said US Steel spokeswoman Amanda Malkowski. The company’s shares were suspended due to volatility after an 8.8% drop in New York.
“It is inappropriate for politics to continue to outweigh true national security interests — especially with the indispensable U.S.-Japan alliance as an important foundation,” Nippon Steel said in a statement. “Nippon Steel still has confidence in the justice and equity of America and its legal system and — if necessary — will work with US Steel to consider and take all available steps to reach a fair conclusion.”
The fate of the once-famous U.S. steel maker has become a hot political issue since the company reached a deal to be acquired by its Japanese suitor nearly a year ago. US Steel said the deal represents a lifeline and warned it may move its headquarters out of Pennsylvania and close some operations if the merger fails.
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Biden — born in the state of Pennsylvania, home of US Steel — has long signaled his opposition to the sale and said the company would remain under national control. At the same time, he has not committed to blocking the deal, while President-elect Donald Trump has repeatedly promised to do so.
The CFIUS process was extended in September with a procedural maneuver, which pushed the filing deadline to this month and raised questions about whether the deal could proceed after the election, even as Biden stood firm. “I haven’t changed my mind,” he said on September 27.
The powerful United Steelworkers union also opposed the deal. Vice President Kamala Harris echoed Biden’s position during her campaign as the Democratic Party candidate in the presidential election.
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It is unusual for CFIUS to reject acquisitions by entities from a friendly country, such as Japan.
The exact timing of any Biden announcement is unclear. The president has 15 days from the referral to announce a decision. Another extension of the CFIUS process — which would defer the decision to the next administration — is not expected, some of the sources said.
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