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The deal has become a political hot potato. This month, Vice President Kamala Harris, the Democratic presidential nominee, said at a rally in Pennsylvania, the swing state where US Steel is headquartered, that she wants US Steel to remain “American owned and operated,” echoing a view held by President Joe Biden Photo: Bloomberg
The US national security panel reviewing Nippon Steel’s $14.9 billion bid for US Steel let the companies refile their application for approval of the deal, a person familiar with the matter said, delaying a decision on the politically sensitive merger until after the Nov. 5 presidential election.
The move offers a ray of hope for the companies, whose proposed tie-up appeared set to be blocked when the Committee on Foreign Investment in the United States (CFIUS) alleged on Aug.31 the transaction posed a risk to national security by threatening the steel supply chain for critical US industries.
CFIUS needs more time to understand the deal’s impact on national security and engage with the parties, the person said on Tuesday. Refiling sets a new 90-day clock to review the proposed tie-up and make a decision.
The review was expected to take close to the full 90 days, another person familiar with the matter said.
Nippon Steel declined to comment. CFIUS and US Steel did not immediately respond to requests for comment from Reuters.
“Extending the timeline takes some pressure off the parties and, importantly, pushes the decision past the election in November,” said Nick Klein, a CFIUS lawyer with DLA Piper.
The deal has become a political hot potato. This month, Vice President Kamala Harris, the Democratic presidential nominee, said at a rally in Pennsylvania, the swing state where US Steel is headquartered, that she wants US Steel to remain “American owned and operated,” echoing a view held by President Joe Biden.
The White House reiterated that position on Tuesday.
Harris’ Republican rival Donald Trump has pledged to block the deal if elected. Both candidates have sought to woo union votes.
The United Steelworkers Union, which vehemently opposes the deal, said on Tuesday “nothing has changed regarding the risks that Nippon’s acquisition would pose to national security or the critical supply chain concerns that have already been identified.”
STEEL SUPPLY CONCERNS
CFIUS is concerned Nippon Steel’s merger could hurt the supply of steel needed for critical transportation, construction and agriculture projects, it said in its August letter to the companies, exclusively obtained by Reuters.
It also cited a global glut of cheap Chinese steel, and said that under Nippon, a Japanese company, US Steel would be less likely to seek tariffs on foreign steel importers. It added that decisions by Nippon could “lead to a reduction in domestic steel production capacity.”
In a 100-page response letter to CFIUS, also exclusively obtained by Reuters, Nippon Steel said it will invest billions of dollars in US Steel facilities that otherwise would have been idled, “indisputably” allowing it to “maintain and potentially increase domestic steelmaking capacity in the United States.”
The company also reaffirmed a promise not to transfer any US Steel production capacity or jobs outside the US and would not interfere in any of US Steel’s decisions on trade matters, including decisions to pursue trade measures under US
law against unfair trade practices.
The deal, Nippon added, would “create a stronger global competitor to China grounded in the close relationship between the United States and Japan.”
Robust CFIUS reviews take 90 days but it is common for companies to withdraw their filings and resubmit them to give them more time to address the panel’s concerns.
According to CFIUS’s 2023 annual report, 18% of companies seeking deal approval refiled their applications last year. Nippon Steel and US Steel filed for the review in March, and CFIUS allowed them refile in June, starting a second 90-day clock that runs out on Sept. 23, Reuters reported on Friday.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
First Published: Sep 18 2024 | 10:39 AM IST
