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US panel could not reach consensus on US-Japan steel deal: Nippon / Photo: Richard A. Brooks - AFP/File
NYSE - LSE
US panel could not reach consensus on US-Japan steel deal: Nippon
A US government panel failed to reach a consensus on whether US Steel's acquisition by Nippon Steel threatens Washington's national security, shifting the decision to the White House, the Japanese company said late Monday.
The deadlock by the Committee on Foreign Investment in the United States (CFIUS) means the controversial $14.9 billion transaction will now be referred to President Joe Biden, who is legally required to act within a 15-day deadline.
"Nippon Steel has been informed by CFIUS that the Committee has referred this matter to President Biden after failing to reach a consensus on our transaction with US Steel," Nippon said.
Biden has criticized the deal for months, joining a loud consensus of US power players who have slammed the transaction, including President-elect Donald Trump and the incoming vice president, JD Vance.
The deal became ensnared in the 2024 presidential campaign when Pennsylvania emerged as a critical swing state and leaders of the United Steelworkers (USW) union loudly opposed the transaction.
Nippon officials had hoped to have more success after the election, but there have been few signs of change in the dynamics.
US media have reported that the killing of the deal could prompt litigation from the steel companies. There are also questions about diplomatic fallout from derailing a transaction championed by Japan, a close US ally.
Nippon said the deal should go through.
"During the 15-day period that the President has to make a final decision, we urge him to reflect on the great lengths that we have gone to address any national security concerns that have been raised and the significant commitments we have made to grow US Steel, protect American jobs, and strengthen the entire American steel industry, which will enhance American national security," Nippon said.
"We are confident that our transaction should and will be approved if it is fairly evaluated on its merits."
US Steel also called on Biden to approve the deal, noting that Nippon is based in "one of the United States' closest allies" and describing the transaction as a means to "combat the competitive threat from China."
The Nippon deal is "the best way, by far, to ensure that US Steel, including its employees, communities, and customers, will thrive well into the future," US Steel said.
Nippon has argued that the transaction would pump much-needed capital to update plants in Pennsylvania's Mon Valley, the oldest of which dates to 1875.
The company has described the transaction as a lifeline to Pennsylvania's much-diminished steel industry, vowing to keep US Steel's headquarters in Pittsburgh.
But the USW union has characterized Nippon's commitments as untrustworthy, while slamming US Steel executives as being motivated by the huge windfalls they would likely make from the sale.
"The proposed US Steel-Nippon transaction represents nothing more than corporate greed, selling out American workers and jeopardizing the long-term future of the domestic steel industry and our national security," USW President David McCall said Monday as he urged Biden to block the transaction.
(J.Torres--TAG)
