Biden moves to block $14.9 billion Nippon Steel acquisition of US Steel

Nippon Steel deal threatened: The Biden administration is nearing a decision to block Nippon Steel's acquisition of US Steel, valued at $14.9 billion, according to a Reuters report. This comes amid increasing bipartisan political resistance to the deal.

The White House has stated that the committee reviewing the merger for national security concerns has yet to submit its recommendation to President Biden. The Washington Post first reported the administration’s stance on the issue. Following this news, US Steel's shares dropped by 21 per cent.

Job risks and closures

Earlier on Wednesday, US Steel warned that if the merger with Nippon Steel fails, it could jeopardise thousands of US union jobs. The company also hinted at possible closures of steel mills and a potential relocation of its headquarters from Pennsylvania, a key political state.

The proposed acquisition is facing pushback from both Democratic and Republican sides. Vice President Kamala Harris has expressed her desire for US Steel to remain “American owned and operated,” while former President Donald Trump has promised to block the deal if he wins the 2024 election.

Pennsylvania’s significance in the upcoming presidential race has led both candidates to frequently visit the state. US Steel CEO David Burritt has stressed the deal’s benefits and the negative consequences of its failure, stating that without it, US Steel might shift away from its blast furnace operations, risking numerous jobs and potentially moving its headquarters.

The United Steelworkers union has criticised Burritt’s comments, calling them “baseless and unlawful threats” and dismissing the rally organised by US Steel as a desperate move.

Nippon Steel's investment pledge

In response, Nippon Steel has pledged to invest over $2.7 billion in US facilities, including Mon Valley Works in Pennsylvania and Gary Works in Indiana, to support local manufacturing communities. US Steel has indicated that without the deal, it would not make similar financial commitments and has already reduced jobs in recent years.

Nippon Steel has stated that if the deal goes through, the core senior management and the majority of the board at US Steel would be US citizens. The acquisition has received all necessary regulatory approvals outside the US and has been endorsed by US Steel’s shareholders. It is now awaiting regulatory review within the United States.

(With Reuters Inputs)