United States Steel Corp. Clairton Coke Works in Clairton, Pennsylvania, US, on Tuesday, December 19, 2023.
Nippon Steel’s $15 billion bid for US Steel has been referred to US President Joe Biden, giving him 15 days to decide on a deal he has previously opposed. The Committee on Foreign Investment in the United States (CFIUS), which reviews foreign investments in the US for national security risks, referred the deal to Biden after it was unable to reach a consensus. The decision paves the way for the deal to be killed before President-elect Donald Trump takes office.
US President Joe Biden will review the CFIUS evaluation and has 15 days to block the deal. If he takes no action, the merger would get an unexpected greenlight. Nippon Steel and US Steel have previously said they planned to close the deal before the end of 2024.
In a statement, Nippon Steel urged President Biden to reflect on the great lengths they have gone to address any national security concerns and the significant commitments they have made to grow US Steel. US Steel said it is their hope that President Biden will do the right thing and adhere to the law by approving a transaction that so clearly enhances US national and economic security.
If the deal collapses, Nippon Steel must pay a $565 million penalty to US Steel. Nippon Steel aims to raise its global steel production capacity with US 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 US 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. This makes US Steel “a once-in-a-lifetime opportunity for Nippon Steel,” according to SBI Securities analyst Ryunosuke Shibata.