Nippon Steel offers US veto power in bid for US Steel approval
3 Min Read
If President Joe Biden does not approve the merger before he leaves office, the deal will automatically happen.
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Logo of Nippon Steel on the exterior of Blast Furnace No.1 at the company's Kashima Plant in Kashima, Japan on December 6, 2024. (AP)
According to Reuters, a source has divulged that Japan's Nippon Steel has proposed giving the US government veto power over any potential cuts to U.S. Steel's production capacity in order to ensure the approval of the current President Joe Biden.
Last Monday, the Committee for Foreign Investment in the United States (CFIUS) sent the decision to approve or reject the transaction to Biden.
Biden, who is leaving office on January 20, must decide on the arrangement by January 7. If he takes no action, the merger will be automatically approved.
According to a White House spokesperson, the president "received the CFIUS evaluation" and will be reviewing it.
The proposed acquisition of the historic US steelmaker was initially disclosed in December and was anticipated to be completed by this year's third quarter. According to the FT, anonymous US sources said the Treasury, Defense, and State departments all agreed that the sale presented no national security concern.
The "main opposition', it added, has come from US trade representative Katherine Tai, who, according to the sources, was unconvinced even by a draft from CFIUS outlining how Nippon Steel may act to alleviate worries.
Biden argues that the steel sector has a strategic role for the US, which is currently the world's largest steel importer. The United Steelworkers union strongly opposes the takeover, despite the Japanese group's vow not to slash employment or close any US Steel facilities for at least two years.
Panel reviewing Nippon Steel takeover of US Steel hits deadlock: FT
The Financial Times reported in mid-December that the panel investigating whether Japan's Nippon Steel's takeover of US Steel would pose national security threats hit a deadlock.
The US Treasury informed both sides that the nine agencies that comprise the Committee on Foreign Investment in the United States (CFIUS), which analyzes such purchases, were unable to reach an agreement as the December 23 deadline for making a recommendation to Biden approaches, according to FT.
Biden, like President-elect Donald Trump, has slammed the proposed buyout, which is heavily opposed by American labor organizations.
US Steel is headquartered in Pennsylvania, and in September, the Biden administration informed the steelmaker that its $14.9 billion bid to acquire US Steel would threaten national security by weakening the American steel industry, according to three sources, signaling that the US is likely to block the deal.
Division among the CFIUS agencies would make it simpler for the president to reject the transaction, whereas the panel's unanimous approval would force Biden to find other reasons to oppose it.
Nippon Steel earlier condemned the "inappropriate" involvement of politics in the decision-making process, adding that the agreement will "bolster American economic and national security by countering the threats posed by China."
According to the firm, the weight of politics on the "true national security interests" is "inappropriate", especially in light of Japan and the US' "indispensable alliance" as the foundation.
