A national security review of Nippon Steel’s $15 billion bid for United States Steel (NYSE: X) is ongoing and President Joe Biden will see what it yields before deciding on whether to block the deal, the White House said on Tuesday, cautioning he still opposes the tie-up.
The statement comes after shares of United States Steel tumbled more than 10% on Tuesday afternoon following a Bloomberg report suggesting the deal would be killed off in short order.
CFIUS, a powerful committee charged with reviewing foreign investments in U.S. firms for national security risks, has until December 22 to decide whether to approve, block, or extend the timeline for the deal’s review, Reuters has reported.
“The President’s position since the beginning is that it is vital for United States Steel to be domestically owned and operated,” Saloni Sharma, a White House spokesperson said in a statement. “As we have said before, the President will continue to see what the CFIUS process yields. We have not received any CFIUS recommendation. The CFIUS process was and remains ongoing,” she added.
Bloomberg’s initial headline read that Biden was “set to” block the deal, suggesting a final decision had been made. However, the outlet later updated it to say he “plans to” kill it, echoing prior comments and leaving the door open to a last-minute change.
CFIUS declined to comment.
Japan’s Nippon Steel said it was inappropriate that politics continued to outweigh true national security interests.
“Nippon Steel still has confidence in the justice and fairness of America and its legal system, and – if necessary – will work with U.S. Steel to consider and take all available measures to reach a fair conclusion,” it added in a statement.
United States Steel (NYSE: X) said the transaction should be approved on its merits.
“The benefits are overwhelmingly clear,” it said in a statement. “Our communities, customers, investors, and employees strongly support this transaction, and we will continue to advocate for them and adhere to the rule of law.”
Takahiro Mori, Nippon Steel’s vice chairman and a key negotiator on the deal, will return to the U.S. this week for his ninth trip since the merger was announced “to further efforts to build an understanding of the United States Steel deal”, Nippon Steel’s spokesperson said, declining to provide details.
The two companies are poised to pursue litigation over the process if Biden decides to block the merger.
The acquisition has faced opposition within the U.S. since it was announced last year, with both Biden and his incoming successor Donald Trump publicly indicating their intention to block it.
In September, CFIUS told the two companies the deal would create national security risks because it could hurt the supply of steel needed for critical transportation, construction, and agriculture projects.
Despite opposition, including from the United Steelworkers Union (USW), the Japanese firm has pressed on in pursuit of a deal, promising to not transfer any United States Steel production capacity or jobs outside the U.S. if the merger succeeds.
Nippon Steel has also said it would not interfere in any of United States Steel’s decisions on trade matters, including decisions to pursue trade measures under U.S. law against unfair trade practices.
In a bid to win over workers’ support, Nippon Steel said on Tuesday it planned to give employees $5,000 each if the deal with United States Steel (NYSE: X) closed. It also pledged 3,000 euro ($3,150) closing bonuses to European employees, which would result in nearly $100 million in total payments to employees.
“President Biden understands the stakes, and he promised to have workers’ backs. Now, it’s time for him to formally block the deal so we can start working on securing our industry for the long term,” the USW said in a statement.
