Topline
President Joe Biden will soon block Japan-based Nippon Steel’s planned $14.9 billion takeover of U.S. Steel, according to multiple outlets, sending the 123-year-old American company’s stock reeling more than 20% to a low not seen since last year.
UKRAINE – 2021/12/18: U.S. Steel shares tanked Wednesday (Photo Illustration by Pavlo Gonchar/SOPA … [+] Images/LightRocket via Getty Images).
Key Facts
Biden will attempt to block the deal over concerns from his administration that the acquisition threatens national security, according to the Financial Times.
U.S. Steel’s stock price is down more than 22% as of 2:07 p.m. EDT, slumping to about $27.75 per share—the lowest price the company has traded at since Aug. 2023.
Nippon Steel’s Tokyo listed-shares are fell 0.38% to $21.95 (JPY 3,151) on Thursday.
U.S. Steel CEO David Burritt said Wednesday a failed deal could put the company’s Pittsburgh headquarters in jeopardy and risk “thousands of good-paying union jobs,” The Washington Post reported.
Nippon Steel spokesperson Tucker Elcock told Forbes the company does not believe the acquisition “creates any national security concerns,” adding the company believes the “U. S. government should appropriately handle procedures on this matter in accordance with the law.”
Representatives for the Biden administration did not immediately respond to Forbes’ request for comment.
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Crucial Quote
“We have not received any update or executive order in relation to the CFIUS process,” U.S. Steel spokesperson Andrew Fulton told Forbes. “We continue to stand by the fact that there are no national security issues associated with this transaction, as Japan is one of our most staunch allies. We fully expect to pursue all possible options under the law to ensure this transaction, which is [the]
best future for Pennsylvania, American steelmaking, and all of our stakeholders, closes.”
Big Number
$47.96. That was U.S. Steel’s share price at the start of the year. The company’s stock is now down more than 42% since then following its Wednesday losses.
Tangent
Cleveland-Cliffs, a U.S. Steel competitor, made a $54-per-share offer for U.S. Steel last year that was later passed on. U.S. Steel was concerned about the deal running into antitrust issues, fearing regulators would oppose a large consolidation of the U.S. steel supply, according to Reuters, which noted the deal would also put 95% of U.S. iron ore production under one company.
What To Watch For
The acquisition is also facing investigations from the Justice Department and the Committee on Foreign Investment in the United States, with the former agency conducting an antitrust probe and the latter reviewing the deal’s national security implications. The Committee on Foreign Investment in the United States has not yet provided Biden with a recommendation, according to CBS News. Elcock told Forbes the company has not received any update related to the committee’s process.
Key Background
Biden has voiced opposition to the deal in the past, saying earlier this year “it is vital for it to remain an American steel company that is domestically owned and operated.” The president’s pushback has been spurred in part by his support for the United Steelworkers union—a 1.2 million-member group that has raised concerns over potential job losses and plant closures if the takeover goes through. Burritt told The Wall Street Journal a $3 billion pledge from Nippon would keep U.S. Steel’s older mills active and help workers keep their jobs. The acquisition has also been opposed by Vice President Kamala Harris and former President Donald Trump, both of whom have pushed for domestic ownership and operation of U.S. Steel. Trump has said he would block the deal “instantaneously” if elected. The former president’s running mate, Ohio Sen. JD Vance, echoed regulators’ national security concerns around the deal, saying in a statement a “critical piece of America’s defense industrial base was auctioned off to foreigners for cash” when the takeover was first announced last year.
Further Reading
U.S. Steel Shareholders Approve $14.9 Billion Nippon Steel Sale Amid Biden’s Pushback (Forbes)
