Nippon Steel and US Steel Joint Statement: "Political Judgment"
U.S. President Joe Biden has blocked Nippon Steel's acquisition of the American steel company US Steel, citing concerns that it would weaken national security. In response, the Japanese government issued a strongly worded statement calling the decision "difficult to understand and regrettable." Japan's public broadcaster NHK reported that President Biden's decision marks the first time a presidential order has blocked a Japanese company's acquisition of an American firm.
On the 3rd (local time), President Biden stated in a press release, "US Steel will remain a proud American company owned by Americans and operated by American steelworkers who are union members," announcing the decision to block the sale of US Steel. He explained, "As determined by the Committee on Foreign Investment in the United States (CFIUS), composed of national security and trade experts from across the government, this acquisition would place one of America's largest steel producers under foreign control, posing risks to our national security and critical supply chains."
The Committee on Foreign Investment in the United States (CFIUS), under the U.S. Department of the Treasury, reviews the impact of foreign investments such as mergers and acquisitions of American companies on national security. If security concerns are identified, CFIUS can demand corrective measures or recommend that the president block the transaction.
Regarding the U.S. government's decision, the Japanese government expressed that it is "difficult to understand and regrettable." According to major Japanese media including Kyodo News and NHK on the 4th, Japan's Minister of Economy, Trade and Industry Yoji Muto issued a late-night statement saying, "It is difficult to understand and regrettable that such a judgment was made citing national security concerns." He added, "Voices of strong concern are emerging in the economic sectors of both countries, especially in Japanese industry. We will demand from the Biden administration explanations for this decision and measures to dispel these concerns."
Nippon Steel and US Steel issued a joint statement criticizing the decision as "clearly a political judgment." They added, "Nippon Steel and US Steel will pursue all measures to protect their legal rights." They also stated, "It is shocking and very concerning to treat an allied country like Japan in this manner. This sends a strong message to all companies based in allied countries considering large-scale investments in the U.S. to restrain their investments."
The foreign and defense ministers of the United States and Japan are holding a joint press conference after concluding the 2+2 meeting at the Ikura Guesthouse in Tokyo on July 28 last year. From left to right: Lloyd Austin, U.S. Secretary of Defense; Tony Blinken, U.S. Secretary of State; Kamikawa Yoko, Japanese Minister for Foreign Affairs; and Kihara Minoru, Japanese Minister of Defense. Photo by Yonhap News.
Nippon Steel plans to sue the U.S. government. However, according to the Nihon Keizai Shimbun, it is believed that President Biden's decision itself cannot be overturned. NHK reported that this is the first case where a presidential order has blocked a Japanese company's acquisition of an American company.
When Nippon Steel agreed to acquire US Steel in December two years ago, the contract included a clause requiring a penalty payment if the acquisition did not materialize. If the acquisition ultimately fails, Nippon Steel may have to pay a penalty of 89 billion yen (approximately 83 billion won), meaning it would not be a simple contract failure.
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