Committee on Foreign Investment in the US fails to agree on national security risks of proposed takeover of US Steel.
A decision on whether to allow Nippon Steel’s proposed takeover of US Steel has fallen to United States President Joe Biden after a government panel failed to agree on possible national security risks.
The failure of the Committee on Foreign Investment in the US (CFIUS) to reach a consensus on the $15bn deal on Monday increases the likelihood that Biden will block the takeover in his final days in office.
Biden voiced his opposition to the acquisition during his ill-fated re-election campaign, insisting on the need for “strong American steel companies powered by American steelworkers”.
Following CFIUS’s failure to reach a consensus, Biden has 15 days to approve the deal or extend the timeline for making a decision.
US President-elect Donald Trump, who takes office on January 20, also opposed the deal, describing the proposed takeover of the Pittsburgh-based steel maker by Japan’s largest steel producer as “a horrible thing”.
Under the terms of the acquisition, US Steel would become a subsidiary of Nippon Steel but keep its name and its headquarters in Pittsburgh.
The combined company would be one of the world’s largest steel producers.
US Steel and Nippon Steel on Monday both urged Biden to allow the acquisition to proceed as planned.
“The transaction between U.S. Steel and Nippon Steel enhances U.S. national and economic security through investment in manufacturing and innovation – by a company based in one of the United States’ closest allies – and forges an alliance in steel to combat the competitive threat from China,” US Steel said in a statement.
“This is a transaction that should be approved on its merits, and one that should be a model for ‘friendshoring’ investment.”
The United Steelworkers labour union (USW), which has expressed scepticism that Nippon Steel would keep jobs at unionised plants, reiterated its opposition to the takeover.
“The proposed US Steel-Nippon transaction represents nothing more than corporate greed, selling out American workers and jeopardizing the long-term future of the domestic steel industry and our national security,” USW President David McCall said in a statement.
While Republicans and Democrats are broadly aligned against the deal, the opposition has cast a cloud over US relations with Japan, one of Washington’s closest allies.
Japanese Prime Minister Shigeru Ishiba last month wrote to Biden asking him to approve the deal to avoid damage to ties between the sides, the Reuters news agency reported, citing two people familiar with the matter.
