Biden expected to block US Steel acquisition by Nippon

President Joe Biden is getting ready to block Nippon Steel’s $14.9 billion acquisition of the US Steel (USS), a move that could end the proposed merger, reports The Washington Post. 

Following the news, USS’s stock dropped 17.5%, losing a quarter of its value in just 30 minutes, closing at $29.37.

Nippon Steel had agreed to buy USS shares at $55 each in December 2023.

The United Steelworkers union and politicians opposed the merger, saying the deal would jeopardize national security and union jobs. The union representing 10,000 US steelworkers supported a lower $7.3 billion bid from Cleveland Cliffs, an American steelmaker.

Nippon Steel has tried to address the union’s concern and promised not to close plants or take away jobs until the union’s current contract ends in 2026.

The Committee on Foreign Investment in the United States is investigating the deal. USS, which produces 20 million metric tons annually, argues that no security issues exist.

Additionally, the Justice Department is conducting an antitrust review of the merger, further complicating the deal’s future.

Japan’s Nippon has pledged over $2.7 billion to modernize the USS’s aging plants in Pennsylvania and Indiana, in addition to a previous $1.4 billion investment. The company, which has a capacity of 66 million metric tons, asserts that the acquisition would strengthen the American steel industry.

Political stakes and union support
Biden’s opposition to the deal comes after Vice President and Democratic presidential nominee Kamala Harris spoke against the merger recently as she seeks union support in key swing states like Pennsylvania ahead of the 2024 election.

The move could strain relations between the US and ally Japan, where Nippon is the largest steelmaker.