The Biden administration is facing a crucial decision regarding the proposed $14.1 billion takeover of United States Steel Corporation (X) by Japanese Nippon Steel (NPSCY). President Joe Biden and Vice President Kamala Harris are aiming to block the deal, citing national security risks, but the Committee on Foreign Investment (CFIUS), responsible for reviewing such transactions, has yet to propose a recommendation to the President. This delay comes amidst mixed reactions from stakeholders, including union members and other industry players.
While the Biden administration stands firm in its desire to maintain American ownership of U.S. Steel, former President Donald Trump has openly opposed the deal. Sources familiar with the matter suggest that Biden intends to block the acquisition once it reaches his desk.
The potential ramifications of this decision are significant. Nippon Steel’s Vice Chairman, Takahiro Mori, is scheduled to meet with top U.S. officials in Washington to discuss the situation. United Steel Workers President Dave McCall has voiced concerns, stating that the merger could jeopardize national security and critical supply chains. Conversely, Jason Zugai, vice president of United Steelworkers Local 2227, believes the deal would secure jobs in the Mon Valley for the next 50 to 100 years.
The Biden administration’s concern about national security risks has reportedly been raised, but the U.S. State and Defense departments have not aligned with this view. Last week, Shigeru Ishiba, a leading contender for Japan’s Prime Minister, expressed his apprehension about the potential U.S. action, deeming it “very unsettling” and a potential threat to the trust between allies.
The uncertainty surrounding the deal has impacted U.S. Steel’s stock price. On Wednesday, the company’s shares surged 6.95% to close at $33.39, and further increased 1.77% in after-hours trading. Despite the recent gains, U.S. Steel’s stock is down 30.38% this year. This situation highlights the complex interplay between national security, economic considerations, and international relations in the global business landscape.
