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President Joe Biden is expected to block a $15 billion deal by Japan’s Nippon Steel to buy US Steel, ending months of frantic lobbying and causing a setback in Washington’s relations with its closest Asian ally -Peaceful.
In one of his last actions in government, Biden – long opposed to the takeover – is expected to announce on Friday his decision to end the proposed acquisition of the iconic American steelmaker, according to two people familiar with the matter.
One of those people said the White House had not yet informed Japanese steel on the decision.
The president’s expected decision comes after an interagency review of investments, known as the Committee on Foreign Investment in the United States, failed to reach consensus by the December 23 deadline, if the acquisition posed a threat to national security.
Two people familiar with the matter said Nippon Steel would likely take legal action against the outgoing president’s decision.
One person said such action could, during the investigative process, reveal the extent to which the decision was politically motivated rather than national security concerns. The process would also expose the limits of the Cfius process and its vulnerability to political interests.
US Steel shares fell 8 percent Friday in pre-market trading.
Nippon Steel declined to comment.
President-elect Donald Trump also had threatened to cancel the deal and pledged to protect the Pittsburgh-based company through a combination of tariffs and tax incentives.
The conclusion of this saga which lasts a year marks the failure of a daring bet by the Japanese group which will soon transformed into a sensitive political issue in an election year. It also represents a significant departure from the long-standing open investment environment in the United States.
Biden’s decision risks undermining four years of work to reassure allies such as Japan of their special relationship with the United States, amid strategic competition with China and a shift toward protectionism, support for unions and the sentiment of “America First” in American politics.
U.S. and Japanese government officials fear broader consequences for investments and mergers and acquisitions by Japan and other U.S. partners, as well as implications for the strength of the U.S.-Japan alliance.
Takahiro Mori, vice president of Nippon Steel, spearheaded the Japanese steelmaker’s last-ditch effort to win over government officials and union activists in Washington and Pennsylvania.
Those efforts included a new proposal this week that offered the government a veto on any reduction in steel production capacity at the majority of Nippon Steel’s plants in the United States, adding to a series of other guarantees on employment and investment.
The move followed Cfius’ concerns that US Steel could reduce domestic steel production under Japanese ownership, thereby affecting industries of national importance.
However, these measures did little good, even as some of Biden’s top advisers tried to dissuade him from obstructing the deal.
His death marks a victory for Katherine Tai, the U.S. trade representative, and David McCall, president of the United Steelworkers union, who were the two most vocal opponents of the deal.
