Biden blocks proposed Nippon Steel deal to acquire US Steel

WASHINGTON (AP) President Joe Biden blocked Japan's Nippon Steel's proposed nearly $15 billion deal to buy Pittsburgh-based US Steel, confirming his earlier pledge during the presidential campaign to prevent the acquisition of the most famous steel company in Steeltown, USA.

The proposed deal set off an election-year political whirlwind in America's industrial heartland and its blocking led to a threat of litigation from Nippon Steel.

We need major American companies representing the majority of American steel capacity to continue to lead the fight on behalf of the national interests of the Americas, Biden said in a statement Friday morning.

Nippon Steel and US Steel blasted the decision, saying in a joint statement that Biden's blocking of the deal reflected a blatant violation of due process and the law in a process they said had been manipulated to advance Biden's political agenda.

He also insisted that Biden had cited no credible evidence that the deal posed a national security concern and suggested he would take legal action, saying we had no choice but to take all appropriate steps to protect our legal rights.

Biden's decision comes after the Committee on Foreign Investment in the United States, known as CFIUS, failed to reach consensus on possible national security risks from the deal last month and sent Biden a long-awaited report on the merger. He had 15 days to make a final decision.

The committee, chaired by Treasury Secretary Janet Yellen and made up of other Cabinet members, can recommend to the president whether to block a transaction, and federal law gives the president that power.

A U.S. official familiar with the matter, who spoke on condition of anonymity, told The Associated Press last month that some federal agencies represented on the panel were skeptical that allowing a Japanese company to buy an American steelmaker would create national security risks.

The decision comes just weeks before the Democratic president leaves office and could harm U.S. relations with Japan, which is the largest U.S. ally in Asia and the largest foreign holder of U.S. debt.

In their statement, the two steel companies said it was shocking and deeply troubling that the United States would reject a transaction that favors its interests and thus treat an ally like Japan.

Unfortunately, this sends a frightening message to any company based in a U.S. allied country that plans to invest significantly in the United States, the companies said.

Biden had already spoken out against the deal last March during the presidential campaign and was supported by the United Steelworkers Union, concerned about whether the company would honor existing labor agreements or cut jobs, as well as by the financial transparency of the company.

It's important that we maintain strong American steel companies, powered by American steel workers, Biden said in a March statement, when he was still seeking re-election to the presidency before dropping out of the race. US Steel has been an iconic American steel company for more than a century, and it is essential that it remains a nationally owned and operated American steel company.

President-elect Donald Trump also opposed the acquisition and pledged in December on his Truth Social platform to block the deal and use tax incentives and tariffs to grow the company.

On Friday, USW President David McCall said the union was grateful for Biden's decision to block the sale and called it a good decision for our members and for our national security.

McCall had long questioned Nippon Steels' status as an honest broker for U.S. domestic business interests and reiterated it Friday, saying in a statement that Nippon had revealed itself to be a serial trade cheat.

Allowing him to purchase US Steel would have given him the opportunity to further destabilize our trading system from within and, in doing so, undermine our ability to meet our own national security and critical infrastructure needs, a McCall said.

McCall insisted that US Steel has the financial means to make the company strong and resilient.

For its part, Nippon Steel said it was best positioned to help U.S. steel compete in a Chinese-dominated industry and to invest billions in facilities represented by the United Steelworkers union, including senior aging furnaces of the company.

He pledged to protect US Steel in trade matters and promised not to import steel slabs that could compete with blast furnaces.

Nippon Steel announced plans in December 2023 to buy the steel producer for $14.9 billion in cash and debt, and pledged to keep the US Steel name and its headquarters in Pittsburgh. Even so, his proposal raised concerns about the possible consequences of the transaction for union workers, supply chains and U.S. national security.

The announcement comes amid renewed political support for rebuilding the U.S. manufacturing sector and follows a long period of protectionist U.S. tariffs that analysts say have helped reinvigorate domestic steel.

Nippon Steel waged a public relations campaign to win over its supporters, even offering $5,000 closing bonuses to U.S. Steel employees, an expense of nearly $100 million.

A growing number of conservatives and business groups like the U.S. House of Representatives had publicly supported the deal, as Nippon Steel began to win over some USW union members and mayors of areas near its blast furnaces in Pennsylvania and Indiana.

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Levy reported from Harrisburg, Pennsylvania.

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