U.S. President Joe Biden has reportedly decided to block Nippon Steel's acquisition of US Steel. The White House is expected to announce this decision as early as the 3rd.
Bloomberg News cited multiple sources on the 2nd (local time), reporting, "Biden has decided to block the sale of US Steel," adding, "This ends the $14.1 billion deal that faced strong opposition for months and raised questions about the future of America's major industries and companies." On the same day, The Washington Post (WP) also reported this, citing officials.
Earlier, the Committee on Foreign Investment in the United States (CFIUS), under the U.S. Treasury Department, which had been reviewing Nippon Steel's acquisition of US Steel, referred the case to the White House on the 23rd of last month. However, due to objections from some agencies within the committee, including the U.S. Trade Representative (USTR), which raised national security concerns over the decline in domestic steel production, the review failed to reach a consensus, leaving only President Biden's final decision pending.
Just days before Biden's decision, Nippon Steel made a last-ditch effort by proposing measures that would allow the U.S. administration to exercise veto power if US Steel's production capacity were to be reduced, but it appears they failed to secure approval for the acquisition.
US Steel is a company regarded as a symbol of American industrialization. The issue became a hot topic in the U.S. when Nippon Steel, ranked 4th globally in crude steel production, announced plans in December 2023 to acquire US Steel for $14.9 billion (approximately 20.8 trillion KRW). At the US Steel shareholders' meeting held in April last year, the merger with Nippon Steel was approved by an overwhelming majority, briefly creating a favorable atmosphere.
However, the acquisition faced a sudden downturn as both President Biden and President-elect Donald Trump, who is set to take office this month, publicly opposed the deal. Especially, Biden, who has pledged to revive American manufacturing capabilities, has faced continuous pressure from both the Democratic and Republican parties as well as labor unions to block the transaction. Considering the traditional alliance with Japan, the Biden administration's industrial policy was also seen as being put to the test. It is reported that Japanese Prime Minister Shigeru Ishiba sent a letter to President Biden in November last year requesting approval for the acquisition.
Bloomberg noted, "Now US Steel must restart the sales process or begin the difficult task of finding a new buyer, and Nippon Steel must also seek alternative growth engines," but pointed out that both companies have indicated potential legal action if President Biden officially blocks the acquisition, which remains a variable.
US Steel began in 1901 when John Pierpont Morgan acquired Andrew Carnegie's Carnegie Steel, earning Morgan the nickname "Steel King." US Steel was formed through mergers with Federal Steel Company and National Steel Company and was once the world's largest steel company, setting a record as the first company to surpass a $1 billion valuation. However, in the latter half of the 20th century, it lost dominance to Japan, Germany, and China, and its corporate value shrank after divesting profitable energy business units. Once the world's largest by market capitalization, US Steel was removed from the S&P 500 index in 2014.
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