Biden officially blocks Nippon Steel’s acquisition of US Steel

Japanese steel company Nippon Steel Corp.’s (NSC’s) $14.9 billion bid to acquire Pittsburgh-based United States Steel Corp. has been rejected by President Joe Biden after a lengthy review process. The companies now will have 30 days to “fully and permanently abandon” the proposed transaction, the president says in his ruling, unless the date is extended by the Committee on Foreign Investment in the United States (CFIUS).

In a statement announcing his decision, Biden cites national security as a leading factor and stresses the importance of maintaining a strong domestically owned and operated steel industry, adding that steel production and the workers who produce it are the nation’s backbone.

RELATED: Commentary: Merger opposition yields opponents of its own | Commentary: Evaluating Nippon Steel’s acquisition of US Steel

Additionally, Biden says for too long U.S. steel companies have faced unfair trade practices as foreign companies have dumped steel on global markets at artificially low prices, leading to job losses and factory closures domestically.

“We need major U.S. companies representing the major share of U.S. steelmaking capacity to keep leading the fight on behalf of America’s national interests,” he says. “As a committee of national security and trade experts across the executive branch determined, this acquisition would place one of America’s largest steel producers under foreign control and create risk for our national security and our critical supply chains.

“So, that is why I am taking action to block this deal. It is my solemn responsibility as president to ensure that, now and long into the future, America has a strong domestically owned and operated steel industry that can continue to power our national sources of strength at home and abroad; and it is a fulfillment of that responsibility to block foreign ownership of this vital American company. U.S. Steel will remain a proud American company—one that’s American-owned, American-operated, by American union steelworkers—the best in the world.”

Biden’s decision comes after a CFIUS review process ended without a consensus. The committee referred NSC’s bid to Biden Dec. 23, 2024, giving the president a 15-day window to make a ruling. Biden, as well as President-elect Donald Trump and members of Congress, previously voiced opposition to the merger, which was first announced in late 2023.

In a joint response, NSC and U.S. Steel have condemned Biden’s “unlawful decision” to block the proposed acquisition and say they will take “all appropriate action to protect our legal rights.”

The companies say Biden’s ruling reflects a clear violation of due process and the law governing CFIUS. “Instead of abiding by the law, the process was manipulated to advance President Biden’s political agenda. The president’s statement and order do not present any credible evidence of a national security issue, making clear this was a political decision.”

The companies say they are confident the transaction would “revitalize” communities that rely on American steel, including in Pennsylvania and Indiana, provide job security for American steelworkers and enhance the American steel supply chain, help the country’s domestic steel industry compete more effectively with China and bolster national security. They point to NSC’s commitment to invest at least $1 billion in U.S. Steel’s Mon Valley Works in Pennsylvania and approximately $300 million to its Gary Works plant in Indiana as part of a $2.7 billion investment.

“Blocking this transaction means denying billions of committed investment to extend the life of U.S. Steel’s aging facilities and putting thousands of good-paying, family-sustaining union jobs at risk,” the companies say. “In short, we believe that President Biden has sacrificed the future of American steelworkers for his own political agenda. We are committed to taking all appropriate action to protect our legal rights to allow us to deliver the agreed-upon value of $55 per share for U.S. Steel’s stockholders upon closing.”

Additionally, the steelmakers say, “Since the outset of the regulatory review process, we have diligently and transparently engaged with CFIUS. The record before CFIUS is abundantly clear that this transaction, with the commitments made by Nippon Steel, would strengthen, not weaken, national security. Yet, it is clear that the CFIUS process was deeply corrupted by politics, and the outcome was pre-determined, without an investigation on the merits, but to satisfy the political objectives of the Biden White House. It is shocking — and deeply troubling — that the U.S. government would reject a procompetitive transaction that advances U.S. interests and treat an ally like Japan in this way. Unfortunately, it sends a chilling message to any company based in a U.S. allied country contemplating significant investment in the United States.

"To proactively address any concerns that could be raised by CFIUS, Nippon Steel voluntarily committed to various mitigation measures that would be fully enforceable by the U.S. government, including: having a majority of the go-forward board of directors of U. S. Steel be composed of U.S. citizens; having three independent directors who will be approved by CFIUS; ensuring that key positions such as CEO and CFO will be U.S. citizens; removing any Nippon Steel involvement in trade measures proposed by U. S. Steel; prohibiting the transfer of any production and jobs outside the U.S.; guaranteeing that production capacity at U. S. Steel’s facilities in Pennsylvania, Arkansas, Alabama, Indiana and Texas would not be reduced for ten years without approval from CFIUS; regularly reporting to CFIUS on the status of compliance with the national security agreement; and allowing CFIUS to send an observer to the board of directors. However, CFIUS did not give due consideration to a single mitigation proposal offered by the Parties, as evidenced by the absence of any written feedback to the four robust national security agreements that the Parties proactively offered over 100 days. We are deeply disappointed to see President Biden’s decision today.

"We would like to express our sincere gratitude to the wide range of stakeholders in the United States and Japan, including U. S. Steel employees, local business and community members, government officials, and elected officials for their tremendous cooperation and enthusiastic support for this transaction. We will never give up on pursuing business in the U.S. for the benefit of the U.S. domestic stakeholders. We continue to believe that a partnership between Nippon Steel and U. S. Steel is the best way to ensure that U. S. Steel, and particularly its USW-represented facilities, will be able to compete and thrive well into the future – and we will work closely with stakeholders, including government officials from Japan and allies and partners in the U.S., to take all appropriate action to protect our legal rights and secure that future.”

Politicians were not the only skeptics of the merger, though. NSC’s bid was met with resistance from the United Steelworkers (USW) from the outset. In 2023, USW made it known it preferred a bid from Ohio-based Cleveland-Cliffs Inc., which if accepted would have consolidated blast furnace/basic oxygen furnace (BOF) steelmaking capacity in the U.S. In late August of that year, U.S. Steel’s board announced it would look into other statements of interest from outside companies.

The sale to Tokyo-based NSC was announced Dec. 18, 2023, with the intention to close the transaction by the second or third quarter of 2024. At the time, the companies said U.S. Steel would retain its name, brand and headquarters in Pittsburgh, and NSC said it would honor all of U.S. Steel’s commitments with employees, including all collective bargaining agreements in place with its unions and was committed to maintaining those relationships.

U.S. Steel shareholders overwhelmingly approved the deal. According to an April 2024 report from the steelmaker, more than 98 percent of the shares voted at a special meeting were in favor of NSC’s proposal.

“The overwhelming support from our stockholders is a clear endorsement that they recognize the compelling rationale for our transaction with NSC,” U.S. Steel President and CEO David B. Burritt said at the time.

Some U.S. Steel employees also supported the transaction, with hundreds participating in a Sept. 4 rally at the company’s headquarters. At the time of the rally, Burritt said the event was about “displaying support for the transaction with Nippon Steel. We want elected leaders and other key decision-makers to recognize the benefits of the deal as well as the unavoidable consequences if the deal fails.”

Without the transaction, U.S. Steel has said it largely will pivot away from its blast furnace facilities, putting thousands of union jobs at risk, negatively affecting numerous communities across the locations where its facilities exist and depriving the American steel industry an opportunity to better compete on the global stage. The company also has said that if the deal was not approved, it also could move its headquarters away from Pittsburgh.

“The departure of U.S. Steel, a company that has been making steel in the Mon Valley since 1901, would deprive the Pittsburgh area of jobs, tax revenue and community-based contributions,” the company said in September.

NSC currently has U.S. operations in Burnham, Pennsylvania, operating as Standard Steel LLC; Seymour, Indiana, operating as Nippon Steel Pipe America Inc.; Georgetown, Kentucky, operating as International Crankshaft Inc.; Calvert, Alabama, operating as AM/NS Calvert LLC; South Bend, Indiana, operating as Suzuki Garphyttan Corp.; Shelbyville, Indiana, operating as Indiana Precision Forge LLC; Follansbee, West Virginia, operating as Wheeling-Nippon Steel Inc.; and Kalama, Washington, operating as Steelscape.