The US Government is reportedly preparing to prevent Nippon Steel’s $14.9bn (Y2.14trn) acquisition of US Steel, citing national security concerns.
This development comes amid bipartisan political resistance and could be made public within the week, reported Reuters, citing sources.
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In response, Nippon Steel stated: “Nippon Steel continues to believe that the transaction will enhance American national security by reinforcing U.S. Steel and its domestic production capabilities, bringing cutting-edge technologies into the United States, and ultimately making the American industrial base and supply-chain more resilient and better positioned to compete against future pressures from state-supported Chinese competitors.”
The potential blockage of the deal was first reported by the Washington Post.
On 18 December 2023, Nippon Steel announced its intention to acquire US Steel, aiming to form a leading global steelmaker. US Steel shareholders supported the merger on 12 April 2024.
While regulatory approvals from other countries have been secured, the US approval remains pending.
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By GlobalDataUS Steel has expressed that the collapse of the deal with Nippon Steel could jeopardise thousands of US union jobs.
The company has also indicated that it might shut down some mills and consider relocating its Pennsylvania headquarters.
Last week, Nippon Steel committed to investing more than $2.7bn in facilities in Pennsylvania and Indiana, contingent on the deal’s completion.
Without the merger, US Steel would not commit to these investments.
US Steel employees have rallied in support of the deal, urging politicians to acknowledge the benefits and potential adverse outcomes if it falls through.
US Steel CEO David Burritt said: “Today’s rally is about displaying support for the transaction with Nippon Steel. We want elected leaders and other key decision makers to recognise the benefits of the deal as well as the unavoidable consequences if the deal fails.”
