Japan’s Nippon Steel reportedly told the White House it would give the U.S. government veto power over any reduction in U.S. Steel’s production capacity if the merger is approved. The eleventh-hour promise comes as President Joe Biden must decide the fate of the $15 billion deal by Jan. 7.
Nippon guaranteed it wouldn’t reduce production capacity at U.S. Steel facilities in Pennsylvania, Indiana, Alabama, Texas, California and Arkansas without approval from the U.S. government, according to the Washington Post.
Biden, who has less than three weeks left in the White House, has opposed the deal for months. Meanwhile, President-elect Donald Trump has also come out against the deal.
Last week, the Committee on Foreign Investment in the United States finalized a review of the deal. It decided Nippon’s bid could reduce domestic steel production, which could create national security risks.
The CFIUS panel failed to come to terms on whether to approve the deal or recommend the president block it. It’s now in the hands of the president, who can reject the deal or do nothing by the Jan. 7 deadline, which would effectively approve it.
“By providing assurances against reductions in production capacity — which assurances will be legally binding and enforceable by the U.S. Government — Nippon Steel is underscoring the ironclad nature of its commitments to U.S. Steel and its union-represented employees,” the companies said in the letter, according to The Washington Post. “By contrast, without this Transaction, given limited resources, U.S. Steel will revert to its pre-Transaction strategy of deprioritizing existing, union-represented facilities.”
Representatives from the company have been touting the deal at events in steel-producing communities for months.
“We have been clear from the outset that there will be no job loss or plant closure because of this deal,” Nippon Steel Vice Chairman Takashiro Mori said at an event in Gary, Indiana, in December. “If anything, we will need more steelworkers to meet our vision for the future. We are not transforming jobs or production overseas, and we will protect U.S. Steel from unfair trade.
“We are not going to ship slabs from across the world to the United States,” he continued. “We believe steel is a local business, and the U.S. customers should receive products produced from slabs made in the United States.”
If Biden does change course and approve the deal, veto authority would be in the hands of Trump.
“They shouldn’t be allowed to buy it,” Trump said of the deal in August. “We have to make it work. You don’t want to sell U.S. Steel.”
Wall Street is hopeful the promise of veto power will push the deal through. U.S. Steel stock is up more than 8% since Monday, Dec. 30, jumping as much as 14% on Tuesday, Dec. 31, its biggest surge in more than a year.