TL/DR –
U.S. President Biden has expressed his opposition to the proposed takeover of U.S. Steel by Japan’s Nippon Steel. The proposed $15 billion buyout is being reviewed by the Committee on Foreign Investment in the United States (CFIUS), with scrutiny focusing on potential national security concerns. The Biden administration has made supply chain resiliency a priority, and the loss of U.S. control over domestic steel supplies might be viewed as a national security risk.
President Biden Opposes Nippon Steel’s Takeover of U.S. Steel
President Biden, at a recent campaign event in Pennsylvania, clarified his opposition to Japan’s Nippon Steel’s proposed takeover of U.S. Steel. Despite U.S. Steel’s expectation of completing the acquisition this year, the timing is subject to regulatory approvals.
Nippon Steel Delays Acquisition Timeline
Nippon Steel announced a delay in its deal to close from mid-year to end of 2024 due to requests for additional transaction information by the Department of Justice, which is reviewing the deal.
Intense Scrutiny Could Scuttle $15 Billion Buyout
The increasing examination of the acquisition fuels speculations that the Biden administration could ultimately thwart the $15 billion buyout. Amid strong opposition from union members and Senate Democrats, the Committee on Foreign Investment in the United States (CFIUS), the ultimate arbiter of the merger, faces pressure to conclude that the deal threatens national security.
Previous Cases of CFIUS Intervention
CFIUS, established in the 1970s to regulate international mergers and acquisitions considering national security, has recently been focusing on keeping Chinese investments out of America. It previously intervened in a potential deal with Nippon Steel and Allegheny International, leading to Nippon’s withdrawal of its offer.
National Security Concerns Incite CFIUS Investigation
The proposed U.S. Steel acquisition by Japan’s Nippon Steel has incited concerns of national security, given the importance of supply chain resiliency since the pandemic. Recent concerns over China’s advances in areas like semiconductors and quantum computing have been classed as matters of national security, leading to increased scrutiny of such transactions by CFIUS.
Nippon Steel Reasserts Commitment to U.S. Jobs
Following President Biden’s comments, Nippon Steel released a statement rejecting that the deal posed a threat, promising job protection and investments in Pennsylvania.
Political Considerations Overshadow Policy
Given the election year and the sensitive nature of a foreign company purchasing an iconic U.S. brand, there are concerns that politics may overshadow policy in the pending decision about the acquisition.
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