President Joe Biden is preparing to block Japan's Nippon Steel's acquisition of U.S. Steel, citing national security concerns, according to reports. This news caused U.S. Steel shares to plummet by more than 17% on Wednesday.
The White House is close to making the announcement concerning the $14.9 billion deal amid bipartisan political opposition, Reuters reported, citing two people familiar with the matter. The report said that the announcement may be made as soon as later this week.
Amid the ongoing issue, U.S. Steel CEO David Burritt warned Wednesday that if the acquisition isn't pushed through, thousands of U.S. union jobs could be at risk, and the company would be forced to shut some of its plants and also move its headquarters from Pittsburgh, Pennsylvania, according to The Wall Street Journal. He added that the deal is crucial in order to maintain jobs and in keeping U.S. Steel's older plants competitive.
If the White House decides to block the deal, it could potentially strain the United States' ties with Japan.
The Committee on Foreign Investment in the United States, or CFIUS, is currently reviewing the deal. This body is responsible for scrutinizing foreign investments and assessing their potential impact on the national security of the U.S. The CFIUS is led by Treasury Secretary Janet L. Yellen and includes members of the State, Justice, Commerce, Defense, Energy, and Homeland Security Departments.
A U.S. Steel spokesperson said that they have not received any update from the CFIUS or executive order related to the committee's review. "We continue to stand by the fact that there are no national security issues associated with this transaction, as Japan is one of our most staunch allies," the spokesperson said.
"We fully expect to pursue all possible options under the law to ensure this transaction, which is best future for Pennsylvania, American steelmaking, and all of our stakeholders, closes," they added.
A spokesperson for Nippon Steel also stated that they had "not received any update related to the CFIUS process."
Following the news of the expected move, shares of U.S. Steel dropped 17.5% on Wednesday, while Nippon Steel shares closed down 0.4% in Tokyo after climbing on the news earlier in the day.
Earlier this week, Vice President Kamala Harris expressed her opposition to the planned sale of U.S. Steel to Japan's Nippon Steel, saying that the company should stay domestically owned.
The vice president aired her thoughts on the matter during a joint campaign appearance with Biden in Pennsylvania. Her stance reflected the White House's position on the matter, which has been consistent over a month, CNBC reported.
In April, Biden opposed the sale of U.S. Steel to the Japanese firm and said that it is "vital" for U.S. Steel "to remain an American steel company that is domestically owned and operated."
