Biden Administration Blocks Nippon Steel's Acquisition of US Steel
Washington D.C., Tuesday, 10 December 2024.
The Biden administration has halted Nippon Steel’s $14.1 billion acquisition of US Steel, citing national security and domestic job concerns.
Deal Details and Timeline
The proposed $14.1 billion acquisition of United States Steel Corporation (NYSE: X) by Japan’s Nippon Steel Corp. is set to be formally blocked by President Biden later this month [1]. The Committee on Foreign Investment in the United States (CFIUS) panel, which has been reviewing the takeover throughout 2024, must refer its decision to Biden by December 22 or 23 [1]. This development comes despite recent attempts to salvage the deal, including a face-to-face meeting in late November between Nippon Steel’s vice chairman Takahiro Mori and the United Steelworkers union [2].
Employment and Investment Implications
The decision impacts one of America’s largest steel manufacturers, which currently employs 21,803 workers as of December 31, 2023 [6]. Nippon Steel had pledged significant investments, including $1 billion to upgrade the 86-year-old hot strip mill at Irvin, with projections of creating 5,000 additional jobs over a four to five-year period [4]. However, these commitments were not sufficient to overcome concerns about foreign ownership of a strategic U.S. asset [1][2].
Market Response and Analysis
The market has been closely monitoring the situation, with U.S. Steel’s stock being significantly affected. Prior to this development, some analysts had been optimistic about the deal’s prospects, with GLJ Research even raising their price target for U.S. Steel, estimating a 50% chance of deal approval [4]. Nippon Steel’s original offer stood at $55 per share [4], representing a substantial premium over current trading prices [GPT].