Thomas Barwick
Update 6:25pm: Adds US Steel statement.
US Steel (NYSE:X) plummeted 18% on reports that President Joe Biden is preparing to block the Nippon Steel (OTCPK:NPSCY) deal, according to multiple media reports.
The Biden administration has concluded that the more than $14 billion sale of US Steel () will pose a national security risk that can’t be mitigated by the U.S and Japanese groups., according to the FT report, which cited several people familiar with the matter. The Washington Post and Bloomberg also reported that the Biden is preparing to block the combination.
Biden’s decision to block is expected in the coming days, according to the FT. The Committee on Foreign Investment in the US, which was evaluating the deal for national security concerns, informed Nippon Steel (OTCPK:NPSCY) recently that the deal posed national security concerns that could not be overcome.
A White House official declined to comment to the Washington Post, though said in a statement that CFIUS hasn’t yet transmitted its recommendation to Biden.
US Steel (X) said it has not received any update or executive order in relation to the CFIUS process, according to a statement emailed to Seeking Alpha late Wednesday.
“We continue to stand by the fact that there are no national security issues associated with this transaction, as Japan is one of our most staunch allies,” US Steel said in the statement. “We fully expect to pursue all possible options under the law to ensure this transaction, which is best future for Pennsylvania, American steelmaking, and all of our stakeholders, closes.”
White House Press Secretary Karine Jean-Pierre said Wednesday that CFIUS hasn’t made a recommendation on the US Steel deal yet.
Biden has for months said he’s against the $14 billion acquisition of U.S. Steel (X), though he hasn’t outright called for the transaction to be blocked.
US National Security Council spokesman John Kirby said Wednesday that Biden believes US Steel (X) should remain American-owned. He couldn’t confirm reports that Biden would block the steel deal.
The latest update on the steel takeover saga comes after Vice President Kamala Harris said Monday that US Steel (X) should remain domestically owned and operated during a visit to Pittsburgh. Former President Donald Trump last month reiterated that he would block the deal if he gets the top job in the U.S.
Earlier on Wednesday, US Steel CEO David Burritt said the company would close steel mills and likely move its headquarters out of Pittsburgh if its planned sale to Nippon Steel (NPSCY) collapses.
In an interview with the WSJ, Burritt said the nearly $3B Nippon Steel (OTCPK:NPSCY) has pledged to invest in US Steel’s (X) older mills is critical to keeping them competitive and maintaining workers’ jobs.
“We wouldn’t do that if the deal falls through,” Burritt told the WSJ. “I don’t have the money.”
US Steel (X) shares traded at $39.33 on Dec. 15, the day before the Nippon Steel (OTCPK:NPSCY) was announced.
