WASHINGTON, Sept 5 (Bernama-Kyodo) -- United States (US) President Joe Biden is expected to block Nippon Steel Corp's plan to acquire US Steel Corp on grounds of national security, reported Kyodo News Agency citing major media outlets on Wednesday.
This decision marks a rare rejection of a major business proposal from Japan, a key ally of the US.
Biden, along with Vice President Kamala Harris has expressed opposition to the acquisition, though they have not provided specific details, with political considerations playing a significant role as blue-collar workers become a critical voting bloc in the upcoming US presidential election in November.
According to sources familiar with the situation, the Financial Times reported that the Committee on Foreign Investment in the United States (CFIUS) recently informed Nippon Steel that the proposed acquisition raised national security concerns that could not be resolved between the two companies.
The Washington Post further noted that Biden is expected to officially announce his decision to block the acquisition.
Without confirming these reports, White House spokesperson Karine Jean-Pierre remarked that the CFIUS review is "incredibly independent" and that the committee "has not yet submitted a recommendation to the president, which is the next step in this process."
During a press briefing, Jean-Pierre also reiterated Biden and Harris' commitment to ensuring steel manufacturing remains within the US.
CFIUS, chaired by Treasury Secretary Janet Yellen, is responsible for reviewing certain foreign investment transactions in US companies to determine if they pose national security risks.
Nippon Steel, the world’s fourth-largest steel producer, and US Steel, the 24th-largest, had announced the US$14.1 billion acquisition deal in December last year.
US Steel and its shareholders have supported the takeover, seeing it as an opportunity to increase global competitiveness and create the world’s third-largest steelmaker by production volume.
Founded in 1901, US Steel and its associated labour union are based in Pittsburgh, Pennsylvania – a pivotal swing state in the upcoming Nov 5 election.
Responding to Harris’ comments, Nippon Steel expressed confidence that the acquisition would "revitalise the American steel rust belt" and benefit American workers, local communities, and national security in ways unmatched by any alternative.
On Wednesday, Nippon Steel further announced that following the acquisition, US citizens would continue to make up the majority of board members and senior management at US Steel.
In a separate statement, US Steel’s President and CEO, David Burritt, highlighted the potential repercussions of failing to finalise the deal.
He said that without the merger, US Steel may need to pivot away from its blast furnace operations, jeopardising thousands of well-paid union jobs and negatively affecting numerous communities dependent on its facilities.
Furthermore, he noted that the American steel industry could lose an important opportunity to compete effectively on the global stage.
The statement also warned that losing the deal would cast serious doubt over US Steel’s future in Pittsburgh, where it is currently headquartered.
-- BERNAMA-KYODO
