President Biden to decide fate of Nippon Steel's $15 billion bid for US Steel

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By Alexandra Alper and Katya Golubkova

WASHINGTON (Reuters) -Nippon Steel's $15 billion bid for U.S. Steel (X) has been referred to U.S. President Joe Biden, a White House spokesman said, giving the president 15 days to decide on a tie up he has previously said he opposes.

The Committee on Foreign Investment in the United States (CFIUS), which reviews foreign investments in the U.S. for national security risks, referred the deal to Biden after it was unable to reach a consensus, the companies and two sources said.

That gives Biden, who has long opposed the tie-up, 15 days to block the deal. If he takes no action in that time, the merger would get an unexpected greenlight.

"We received the CFIUS evaluation and the President will review it," White House spokeswoman Saloni Sharma said.

The referral to Biden paves the way for the deal to be killed before President-elect Donald Trump takes office.

Trump, who will be inaugurated on Jan.20, has also opposed the deal, which was first announced last December.

Nippon Steel and U.S. Steel said on Tuesday they were informed of the referral. Both companies have previously said they had planned to close the deal before the end of 2024.

"We urge him (Biden) to reflect on the great lengths that we have gone to address any national security concerns that have been raised and the significant commitments we have made to grow U. S. Steel," Nippon Steel said in a statement.

U.S. Steel said: "It is our hope that President Biden will do the right thing and adhere to the law by approving a transaction that so clearly enhances U.S. national and economic security."

If the deal collapses, Nippon Steel must pay a $565 million penalty to U.S. Steel. It has earlier said it could pursue legal action against the U.S. government if the deal falls apart.

Nippon Steel aims to raise its global steel production capacity with U.S. Steel to 85 million metric tons per year from 65 million tons and the deal is core to its goal of lifting production to more than 100 million tons in the long-term.

The U.S. is the only developed nation where domestic steel demand is increasing, with the highest steel prices globally due to production capacity falling short of domestic needs, SBI Securities analyst Ryunosuke Shibata said.

That makes U.S. Steel "a once-in-a-lifetime opportunity for Nippon Steel," Shibata added.

Lack of consensus

CFIUS said on Monday that allowing Nippon Steel to take over U.S. Steel could result in lower domestic steel production representing "a national security risk", according to the Washington Post, which first reported the referral to Biden.