A powerful government panel on Monday failed to reach a consensus on the possible national security risks of Japan’s Nippon Steel’s proposed nearly $15 billion deal to buy U.S. Steel, leaving the decision to President Joe Biden. long-time opponent of the deal.
The Committee on Foreign Investment in the United States, known as CFIUS, has sent its long-awaited report on the merger to Mr Biden, who formally expressed opposition to the deal in March this year and is now 15 days away from a final decision. , the White House said. A U.S. official familiar with the matter, speaking on condition of anonymity to discuss the non-public report, said some federal agencies on the panel were skeptical that allowing a Japanese company to acquire a U.S.-owned steelmaker would pose a national security risk. .
Both Mr. Biden and President-elect Donald Trump have courted U.S. Steel and union workers. He pledged to block the takeover. Amid concerns about foreign ownership of flagship U.S. companies. However, the economic risk is that Nippon Steel has the financial resources to invest in and upgrade its plants, which could help preserve steel production in the United States.
An interagency committee reviews such transactions keeping in mind potential national security risks. Monday was the deadline for approving the deal, and Mr. Biden recommended blocking it or extending the review process.
The Washington Post previously reported that CFIUS submitted its report.
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According to approximate conditions $14.9 billion all cash transactionU.S. Steel will retain its name and headquarters in Pittsburgh, where it was founded in 1901 by J.P. Morgan and Andrew Carnegie. According to World Steel Association statistics in 2023, the company will become a subsidiary of Nippon Steel, and the combined company will become the world’s third largest steel producer.
Mr. Biden, who is backed by the United Steelworkers, said earlier this year that “it is very important that (US Steel) remain a domestically owned and operated American steel company.”
President Trump has also opposed the acquisition and pledged earlier this month on his Truth Social platform to “block this transaction from happening.” Trump has proposed reviving U.S. Steel’s sagging fortunes “through a series of tax incentives and tariffs.”
The steel union said it did not believe Nippon Steel would maintain jobs at union plants, enjoy collective bargaining benefits or protect U.S. steel production from cheap foreign imports.
“Our union has been calling on the government to conduct a rigorous investigation since the sale was announced, and it is now up to President Biden to determine the best path forward,” David McColl, president of the United Steelworkers, said in a statement Monday. “We continue to believe that this means owning and operating U.S. Steel domestically.”
Despite political opposition, Nippon Steel and U.S. Steel mounted public relations campaigns to win over skeptics.
“This transaction is the best way to ensure that U.S. Steel, including our employees, communities and customers, can thrive well into the future,” U.S. Steel said in a statement Monday.
As Nippon Steel began to win over some steel union members and local officials around its blast furnaces in Pennsylvania and Indiana, more and more conservatives publicly supported the deal. Many backers said Nippon Steel has a stronger financial balance sheet than rival Cleveland-Cliffs, which could invest the cash needed to upgrade aging U.S. Steel blast furnaces.
Nippon Steel has pledged to invest $2.7 billion in facilities represented by the United Steelworkers, including U.S. Steel’s blast furnaces, and has pledged not to import steel slabs to compete with the blast furnaces.
It also promised to protect U.S. Steel from trade issues and not lay off workers or close plants during the term of the basic labor agreement. Earlier this month, U.S. Steel employees were given $5,000 in closing bonuses, which amounts to a cost of nearly $100 million.
Nippon Steel also said it is best positioned to help U.S. steel compete in an industry dominated by China.
The proposed sale comes amid renewed political support for rebuilding the U.S. manufacturing sector, a presidential campaign in which Pennsylvania has been a key battleground, and protectionist U.S. tariffs that analysts say have helped reinvigorate domestic steel.
CFIUS, chaired by Treasury Secretary Janet Yellen, reviews business transactions between U.S. companies and foreign investors and can block sales or force parties to change the terms of contracts for the purpose of protecting national security.
The commission’s authority was significantly expanded in 2018 through a bill of Congress called the Foreign Investment Risk Review Modernization Act, known as FIRRMA.
Last September, Mr. Biden issued an executive order expanding the factors the committee must consider when reviewing a deal, such as how the deal affects the U.S. supply chain or puts Americans’ sensitive personal data at risk.
Nippon Steel already operates manufacturing facilities in the United States, Mexico, China, and Southeast Asia. It supplies the world’s leading automakers, including Toyota Motor Corp., and makes steel for railroads, pipes, appliances and skyscrapers.
