Today’s News
The Biden administration is preparing to announce that President Joe Biden will block Nippon Steel’s USD 14.9 billion acquisition of U.S. Steel due to national security concerns, according to sources familiar with the matter.
The decision, expected as early as this week, comes amid increasing bipartisan opposition to the deal and could strain relations with Japan, a key U.S. ally.
Image Source: CNBC
U.S. Steel has warned that without a deal with Japan-based Nippon Steel, thousands of U.S. union jobs could be at risk. The company has also hinted at the possibility of closing some of its steel mills and relocating its headquarters out of Pennsylvania, a state critical to the upcoming 2024 presidential election.
Both Nippon Steel and U.S. Steel have stated they have not received any updates from the Committee on Foreign Investment in the United States (CFIUS) about the deal and maintain that it does not pose any national security threats.
Image Source: Business Standard
The acquisition has drawn criticism from both Democrats and Republicans. Vice President Kamala Harris, who is running for president, and Republican candidate Donald Trump have both voiced strong opposition, emphasizing the need for U.S. Steel to remain under American ownership.
Pennsylvania, a swing state vital for the 2024 election, has become a focal point in this debate, with both candidates frequently addressing the issue there.
While the CFIUS panel has yet to formally recommend a decision to President Biden, the White House has reiterated the president’s view that “American steel companies ought to be American owned.”
In response to the growing opposition, U.S. Steel employees rallied outside the company’s headquarters, urging politicians to consider the potential economic impact and job losses if the deal is blocked.
“We want elected leaders and other key decision makers to recognize the benefits of the deal as well as the unavoidable consequences if the deal fails,” U.S. Steel CEO David Burritt stated.
Nippon Steel has pledged to invest over USD 2.7 billion in unionized facilities in Pennsylvania and Indiana if the acquisition proceeds. However, U.S. Steel has made it clear that it would not make the same financial commitments if the deal is not approved. The acquisition has already secured all necessary regulatory approvals outside the United States and the backing of U.S. Steel’s shareholders. The final decision now rests with the U.S. regulatory authorities.
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