Fate of US Steel’s deal with Japan’s Nippon is now up to Biden, sources say

CNN —
A committee of top government agency officials has notified President Joe Biden that it has not reached a consensus on whether a sale of US Steel to a Japanese rival poses a national security risk, according to two sources familiar with the matter.
The fate of Nippon Steel’s acquisition of US Steel is now in the hands of Biden, who is expected to block it after arguing for months that the company should remain American-owned to protect domestic steel jobs. The Washington Post was first to report on the committee’s review.
CNN has reported throughout the monthslong review that the Committee for Foreign Investment in the United States, known colloquially as CFIUS, was deadlocked over whether the deal posed a national security risk beyond being a political lightning rod.
Customarily, a final report from the committee informs a president’s view of the potential risks a deal poses. Treasury chairs the committee, which is composed of high-level officials from the president’s Cabinet agencies who are responsible for areas of national security.
But within the committee, top officials expressed frustration about public opposition to the deal by Biden, Vice President Kamala Harris and President-elect Donald Trump, imperiling the group’s ability to review the deal on its merits.
Both US Steel and Nippon have maintained that the deal poses no national security threat. Spokespeople for both companies did not immediately respond to a request for comment. Shares of US Steel (X) fell 3% in afterhours trading.
Nippon agreed to buy US Steel a year ago for nearly double the price of the hostile offer the company received from US-based Cleveland Cliffs. To secure approval for the deal, Nippon pledged to invest billions of dollars in US Steel’s business in critical states.
The merger became became a lightning rod as politicians on sides of the aisle vowed to protect American manufacturing.
But US Steel has said the deal is necessary to help shore up the company’s ailing business, which has been struggling to keep up with cheaper foreign steel – mostly from China – for decades. US Steel said in September that without Nippon’s acquisition, it would be forced to close its mills with unionized workers. US Steel has said that the multibillion-dollar investment from its Japanese rival would go further in shoring up the company’s facilities and finances than it could afford on its own.
Nippon has pledged to invest $2.7 billion in US Steel’s unionized mills outside of Pittsburgh and in Gary, Indiana.
But CFIUS wasn’t the only obstacle in the deal’s path: The US Justice Department is also conducting an antitrust review of the potential merger.
It is not clear whether Biden would kill the deal for good or would give the two steel companies and the United Steelworkers union a chance to negotiate a deal that would be acceptable to all sides. Even if Biden chooses that option, Trump could block the deal when he takes office.
The president-elect has said he will block a deal, writing on social media earlier this month that “Through a series of Tax Incentives and Tariffs, we will make U.S. Steel Strong and Great Again.”
CNN’s Chris Isidore contributed to this report.