Written by Alexandra Alper and Katia Golubkova
WASHINGTON (Reuters) – Nippon Steel Corp's $15 billion offer to buy US Steel has been referred to U.S. President Joe Biden, a White House spokesman said, giving the president 15 days to make a decision on a partnership he previously said he opposed.
The Committee on Foreign Investment in the United States, which reviews foreign investments in the United States for national security risks, referred the offer to Biden after it was unable to reach a consensus.
“We have received CFIUS's assessment and the president will review it,” a White House spokesman said. President-elect Donald Trump, who is scheduled to reclaim office on January 20, also opposed the deal, which was first announced last December.
Nippon Steel said on Tuesday it had been informed of the letter from CFIUS.
“We urge him (Biden) to reflect on the significant efforts we have made to address any national security concerns raised and the significant commitments we have made to grow US Steel,” Nippon Steel said in a statement.
Nippon Steel and US Steel previously said they plan to close the deal before the end of 2024.
The Washington Post was first to report the referral to Biden on Monday.
The Committee on Foreign Investment in the United States said Monday that allowing Nippon Steel to take over US Steel could lead to a decline in domestic steel production that poses a “national security risk,” according to The Washington Post.
Nippon Steel said it could eliminate this risk by appointing US citizens to senior management and board positions at US Steel, but the committee was divided in its view on whether such remedies would be sufficient, the newspaper reported.
The US Treasury Department, which leads CFIUS, and the Commerce Department declined to comment.
The deal, which is crucial to Nippon Steel's global expansion, has also faced opposition from the United Steelworkers, a powerful labor union that was key to both Democrats and Republicans in the swing state of Pennsylvania during the Nov. 5 presidential election.
The union is concerned that Nippon Steel may import steel into the United States from its international plants, eroding the company that helped build the Empire State Building and the Allied Armed Forces in World War II.
Nippon Steel previously denied it would use the deal as a cover to import steel and made a series of pledges to protect jobs and investment in US facilities it considers key to its future growth.
“The US Steel deal is a once-in-a-lifetime opportunity for Nippon Steel to drive its growth,” said Ryunosuke Shibata, an analyst at SBI Securities.
He added that the United States is the only developed country where the local demand for steel is increasing, with the highest steel prices recorded in the world due to the decline in production capacity below local needs.
Through US Steel, Nippon Steel aims to raise its global steel production capacity to 85 million metric tons per year from the current 65 million tons, and the asset is central to its goal of raising production capacity to more than 100 million tons in the long term.
Nippon Steel faces a $565 million fine on US Steel if the deal collapses, which would be a huge blow to the Japanese steel company's expansion overseas. She previously said she might take legal action against the US government if the agreement collapses.
Since Japan is the largest foreign investor in the United States, Japanese Prime Minister Shigeru Ishiba last month sent a letter to Biden asking him to approve the acquisition of US Steel by Nippon Steel.
“The deal…strengthens the national and economic security of the United States by investing in manufacturing and innovation – by a company based in one of the United States’ closest allies – and forging an alliance in steel to combat the competitive threat from China,” US Steel said. He said in a statement.
