Joe Biden blocks Nippon Steels' $15 billion takeover of US Steel

US President Joe Biden blocked a $15 billion deal by Japan's Nippon Steel to buy US Steel, dealing a blow to Washington's relations with its closest Asia-Pacific ally and prompting corporate to threaten legal action.

Biden, who has long opposed the purchase, issued an order on Friday requiring Nippon and US Steel to completely and permanently abandon the proposed transaction within 30 days.

In response, both companies called the move a blatant violation of due process and the law. In an indication of possible legal action, they added: Following President Biden's decision, we have no choice but to take all appropriate measures to protect our legal rights.

A clause in the original deal with US Steel requires Nippon to pay a $565 million breakup fee if the deal is blocked.

Biden's extraordinary intervention, which comes just 17 days before the end of his term, caps a presidency during which he has sought to boost U.S. jobs and moved away from the free trade agenda previous administrations.

It is also likely to raise concerns about the United States' receptiveness to future foreign investment, with President-elect Donald Trump, who won the November election on a protectionist agenda, also opposing the deal.

The companies said it was shocking and deeply troubling that the U.S. government would treat an ally like Japan this way.

They added: Unfortunately, this sends a frightening message to any company based in a U.S. allied country that is considering making a significant investment in the United States.

In that order, Biden said there was credible evidence that, through the acquisition, Japan could take actions that would threaten to harm U.S. national security.

The Foreign Investment Committee, which oversees foreign acquisitions, failed to reach consensus by a Dec. 23 deadline on whether the transaction posed a threat to national security.

The companies said the president failed to present any credible evidence of a national security concern, adding that instead of following the law, the process was manipulated to advance President Biden's political agenda.

They added that the Cfius process was deeply corrupted by politics and that the outcome was predetermined.

Biden's intervention marks the failure of Nippon Steel's ambitious expansion plan that has become a sensitive political issue during a U.S. election year.

The decision by the outgoing president, known for his support of unions, follows fierce opposition to the deal from the United Steelworkers union. The group's campaign proved fatal to the purchase, despite intense lobbying in recent weeks by the leaders of US Steel and Nippon.

The White House said Biden's decision was not seen as a snub to Tokyo.

It's not about Japan. It's about U.S. steel production, National Security Council spokesman John Kirby said Friday. It's about keeping one of the largest steel producers in the United States within an American company. It is not about the extraordinary and close relations, or any alliance, that we have with Japan.

US Steel shares fell more than 6 percent after the decision.

Opponents of the buyout welcomed Biden's decision.

Sherrod Brown, the outgoing Democratic senator from Ohio, wrote on That’s why we fought him every step of the way. The president is right to block it.

Biden's decision to cancel the deal will leave the fate of US Steel in limbo. The company had warned that it could close factories and reduce its workforce, or even move its headquarters from Pittsburgh, Pennsylvania, if the deal was blocked.

The Nippon takeover project had attracted significant support in certain regions of the United States which would have benefited from the investment and technology promised by the Japanese company.

William Chou, deputy director of the Japan chair at the Hudson Institute think tank, said the move would be devastating for the steelmaking communities of western Pennsylvania and Indiana.

President Biden talks about protecting the U.S. steel industry, but only in the abstract, he added. At no time did he dialogue with the real steelmakers, nor did he discuss the technology necessary to give them the means to save the steel industry.

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Japanese officials, speaking on condition of anonymity, previously said that while they understood the risk of political intervention Japan faced when launching a bid ahead of the U.S. presidential election, it was disconcerting that a Japanese company could be classified as a security risk.

Heino Klinck, former US deputy assistant secretary of defense for East Asia, said it was ironic and absurd that national security concerns were being cited to justify blocking the deal because Japan is home to the world's largest presence of forward-deployed U.S. military forces. .

The move will cast a shadow over the alliance, he said. It is indeed regrettable that the Biden administration has presented the Chinese Communist Party with a new talking point about America not being a reliable partner.

Additional reporting by Steff Chvez

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