Editor’s note: The article has been updated with comments from U.S. Steel.
The proposed $14.9 billion acquisition of U.S. Steel X by Nippon Steel NPSCY NISTF has been reportedly flagged by the Biden administration as a potential national security risk. This could potentially lead to the deal being blocked.
What Happened: According to three anonymous sources, the administration expressed its concerns to Nippon Steel in a letter. The deal has faced opposition from both Democrats and Republicans, including Vice President Kamala Harris and Donald Trump, who have voiced their desire for U.S. Steel to remain “American owned and operated,” Reuters reported on Thursday.
The Committee on Foreign Investment in the United States (CFIUS) stated in an unreported letter that the deal could harm American steel production and reduce the chances of U.S. Steel seeking trade remedies.
“The committee has identified risks to the national security of the United States arising as a result of the transaction,” the letter said, as per one of the sources.
The companies reportedly responded by echoing U.S. Steel’s public concerns, stating that rejection of the transaction could lead to the idling of U.S. Steel’s blast furnace facilities, potential job losses, and a weakening of the steel supply to U.S. industries.
The companies also accused the U.S. of acting based on politics rather than facts, law, or national security interests.
U.S. Steel denied receiveing any update or executive order from the CFIUS and mentioned that the acquisition deal poses no national security issues as Japan is one of the most staunch allies of the country.
“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,” the statement read.
U.S Treasury Department and Nippon Steel have yet to respond to Benzinga’s queries.
Why It Matters: Earlier, Nippon Steel pledged an additional $1.3 billion investment in two U.S. Steel plants to garner support for its acquisition bid, which was facing resistance from U.S. unions and politicians.
However, the CEO of U.S. Steel warned of plant shutdowns and potential relocation of its headquarters from Pittsburgh if the sale to Nippon Steel does not go through.
Price Action: At the time of writing, U.S. Steel was trading 2.11% higher in the after-hours market on Thursday. NISTF closed 4.35% lower while NPSCY closed 2.01% higher on Wednesday’s OTC market.
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This story was generated using Benzinga Neuro and edited by Pooja Rajkumari
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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