The U.S. government is reportedly poised to reject Nippon Steel’s $14.9 billion acquisition of U.S. Steel, despite the Japanese company’s efforts to downplay national security concerns. After a broad review by the Committee on Foreign Investment in the United States (CFIUS), the decision may rest in the hands of President Joe Biden.
CFIUS reviews deals like this based on national security. The panel has until Monday, Dec. 23 to approve the deal, recommend the president block it or extend the review.
CFIUS sent a letter to Japan’s Nippon Steel that could put the situation in the hands of the president, according to Reuters, who has seen the letter.
The CFIUS panel is split on the issue. The letter says if they can’t come to an agreement before the deadline, they’ll recommend Biden step in. Biden has previously indicated he’d block it.
For his part, President-elect Donald Trump has also said he would block the deal.
Nippon has been working overtime to ease fears and get approval. Reuters reports executives have held four in-person meetings with CFIUS and multiple phone calls with officials. Those calls included one last week with the Treasury and Commerce secretaries. They’ve also put forward three proposals to mitigate the negative impacts of the deal.
“The Committee has not yet reached consensus on whether the mitigation measures proposed by the Parties would be effective … or whether they would resolve the risk to U.S. national security arising from the Transaction,” CFIUS wrote in the letter to Nippon Steel.
“The President may take such action for such time as the President considers appropriate to suspend or prohibit a covered transaction that threatens to impair the national security,” the letter added.
It’s rare for a deal coming from a close U.S. ally like Japan to be blocked on the grounds of national security.
“You think about our country and Japan, our best ally in the Asian theater,” U.S. Steel CEO David Burritt told WTAE-TV Pittsburgh. “We trust them. We trust them with the greatest technology related to military equipment, naval technology, the Patriot missile, the F-35, each of these different things. And yet we don’t trust them to actually invest in our country, in our company and create this value?”
As the clock runs out, both companies involved have taken their pleas for approval to the communities where they produce steel.
“We have been clear from the outset,” Nippon Steel Vice Chairman Takashiro Mori said at an event in Gary, Indiana, last week. “There will be no job loss or plant closure because of the deal. If anything, we will need more steelworkers to meet our vision for the future.”
“The transaction with Nippon Steel provides, by far, the brightest future for U.S. Steel, our employees and communities, and our customers,” U.S. Steel said in a statement to Straight Arrow News. “No other party can do this, and U.S. Steel will not – and does not have the resources – to do this on our own.”
Meanwhile, Nippon told Reuters they, “engaged in good faith with all parties to underscore how the transaction will bolster American economic and national security by countering the threats posed by China.”