Biden Blocks $14.9B US Steel Takeover, Shares Plunge (UPDATED)

Editor's note: This story has been updated with comments from X and Nippon Steel in paragraph six.

President Joe Biden announced on Friday his decision to block the $14.9 billion acquisition of United States Steel Corp. X by Japan's Nippon Steel Corp NPSCY, citing foreign ownership would threaten national security and undermine critical supply chains.

In a statement released by the White House, Biden emphasized the critical role of steel in supporting the nation's infrastructure, defense, and industrial base.

He also highlighted a surge in domestic manufacturing and noted that over 100 new steel and iron mills had been established during his administration.

The President underscored efforts to combat unfair trade practices, including tripling tariffs on steel imports from China. These measures, he said, aim to protect American jobs and restore competitiveness for domestic producers.

"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," he said.

In a joint statement, the companies condemned Biden's decision and called it unlawful. The statement read, "We are dismayed by President Biden's decision to block Nippon Steel's acquisition of U. S. Steel, which 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 that this was a political decision. Following President Biden's decision, we are left with no choice but to take all appropriate action to protect our legal rights." See the complete statement here.

This decision concludes a yearlong saga that drew attention to the iconic Pittsburgh-based company as its fate became entangled in political and economic debates.

While key Committee on Foreign Investment in the United States (CFIUS) members, including the Justice, Treasury, and State Departments support the deal, U.S. Trade Representative Katherine Tai has raised labor-related concerns.

In a last-minute effort to secure approval, Nippon Steel proposed giving the U.S. government direct veto power over production changes at U.S. Steel's facilities.

The United Steelworkers union, led by President David McCall, strongly opposed the acquisition as well. 

Nippon Steel and U.S. Steel have warned of immediate legal challenges if the deal is blocked, claiming in a Dec. 17 letter that political considerations have influenced the review process.

Critics have expressed concerns that blocking the deal could strain U.S.-Japan relations, as Japan is a significant ally and major foreign investor in the U.S., reported CNBC.

Price Action: X shares are trading lower by 7.48% at $30.16 at last check on Friday.

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