US CFIUS Notifies White House of Failed Agreement
The U.S. review authorities, who have been examining Nippon Steel's acquisition of US Steel, ultimately failed to reach an agreement and have left the final decision to President Joe Biden. As a result, there are prospects that this acquisition plan may fall through.
According to the Washington Post (WP) on the 23rd (local time), the Committee on Foreign Investment in the United States (CFIUS), under the U.S. Treasury Department, notified the White House that it could not reach a consensus on the national security risk assessment related to Nippon Steel's acquisition of US Steel.
Nippon Steel is pursuing a plan to acquire US Steel for $14.9 billion (approximately 21.6527 trillion KRW).
CFIUS analyzed that if Nippon Steel acquires US Steel, steel production within the United States could decrease, which may pose a national security risk. In response, Nippon Steel tried to persuade by pledging to appoint Americans to US Steel’s senior management and board of directors. However, it is reported that CFIUS did not reach a final consensus on whether this measure was sufficient. CFIUS reviews the impact of foreign investments, such as mergers and acquisitions of U.S. companies, on national security.
With CFIUS unable to reach a conclusion, the ball has been passed to the White House. According to relevant laws, the president must make a final decision within 15 days. WP reported, citing White House staff, that President Biden is expected to block this acquisition deal. President Biden has publicly opposed this acquisition since March. Donald Trump, the U.S. president-elect who will take office on the 20th of next month, is also negative about Nippon Steel’s acquisition of US Steel.
However, if President Biden opposes the deal, Nippon Steel and US Steel are expected to immediately push back. According to a copy of a letter sent by the two companies’ lawyers to CFIUS on the 17th, they claim that CFIUS’s review was influenced by political factors. They argue that the White House exerted influence over the review process and that President Biden made a deal with the United Steelworkers union for his reelection.
Nippon Steel issued a statement saying it has not yet been notified of the investigation results from CFIUS and urged President Biden to consider the company’s efforts to resolve national security issues. US Steel stated, "This deal is about forming an alliance in the steel sector to counter competitive threats from China," and added, "It is a deal that should be approved on its own merits."
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