President Joe Biden said Friday that he has decided to block a $15 billion acquisition of US Steel by Japanese company Nippon Steel, ending a year-long business saga that led to the policy of a election year.
The decision comes after a national security review by a Treasury Department committee failed to reach a consensus on the deal and referred the final decision to the president in December. NBC News reported in September that Biden was preparing to block the acquisition.
The president, who will leave office in just over two weeks, faced a challenging political calculus about the fate of the iconic Pittsburgh-based company: Allowing a foreign entity with far greater resources to take it over could put the business in jeopardy. a more stable financial base. But keeping US Steel in American hands risked the company’s survival under intense foreign competition.
“As I have said many times, steel production – and the steel workers who produce it – are the backbone of our nation,” Biden said in a statement. “A strong domestically owned and operated steel industry represents an essential national security priority and is critical to resilient supply chains…Without domestic steel production and domestic steelworkers, our nation is less strong and less secure.”
US Steel’s stock price fell sharply following the news, falling 8% in premarket trading on Friday.
The roughly 11,000-worker company, founded in 1901, has declined since its peak, when it employed a peak of about 340,000 during World War II. Its share price has barely risen since the 1990s as cheaper steel production increased overseas, especially in Asia.
When reached for comment Thursday evening, a US Steel spokesperson referred to an earlier statement, saying the deal “enhances America’s national and economic security through investment in manufacturing and innovation,” and then argued that the transaction would “combat the competitive threat.” from China.”
“It is by far the best way to ensure that US Steel, including its employees, communities and customers, thrive in the future,” the spokesperson said. “We are hopeful that President Biden will do the right thing and follow the law by approving a transaction that so clearly enhances the national and economic security of the United States.”
Nippon Steel, Japan’s largest steel producer, did not immediately respond to a request for comment.
The potential blocking of the deal had raised concerns that it could damage U.S. relations with Japan, a key U.S. ally and the country’s largest foreign investor.
There was no immediate comment from officials in Japan, where Friday was a bank holiday. Japanese government officials previously declined to comment on matters related to the management of individual companies, but said it is essential that the United States and Japan strengthen economic relations, “including expanding mutual investment.”
American and international business groups have also criticized what they say is the politicization of the deal.
The proposed acquisition generated controversy almost as soon as it was announced in December 2023, with Biden saying in a statement that month that it “appears to merit serious scrutiny in terms of its potential impact on national security and supply chain reliability.” .
Biden and Vice President Kamala Harris, the Democratic presidential candidate, campaigned against the proposed acquisition, saying US Steel should remain American owned.
President-elect Donald Trump also expressed opposition to the sale, saying in December that he would block the offer and revive US Steel through a combination of tax incentives and tariffs.
Nippon Steel attempted to calm politicians’ concerns, saying in a statement in September that US Steel would remain a US company owned by Nippon Steel North America. Nippon Steel also said that Americans would make up the majority of US Steel’s board of directors and that the US company, under its new ownership, would remain headquartered in Pittsburgh.
“Nippon Steel will prioritize production at US Steel to meet the demand of the US steel market,” Nippon Steel said.
Arata Yamamoto and CNBC contributed.
