On January 11, Nippon Steel from Japan and the US Steel Corporation announced that the Biden administration has extended the order requiring Nippon Steel to abandon the acquisition of the US Steel Corporation until June. Both companies stated that this extension will provide them with some time to resume this transaction.
Outgoing President Biden blocked the acquisition on January 3 citing national security reasons. Treasury Secretary Janet Yellen stated on January 8 that the proposed transaction underwent a “comprehensive analysis” by the Committee on Foreign Investment in the United States (CFIUS), an inter-agency review body.
Following Biden’s announcement, Nippon Steel and the US Steel Corporation have filed lawsuits against President Biden and others, accusing them of improper political interference in the acquisition plan. The extension will provide time for the legal challenges brought by these two companies.
In a statement, the two companies said, “We are pleased that CFIUS extended the deadline in President Biden’s executive order requiring all parties to permanently abandon the transaction to June 18, 2025. We look forward to completing this transaction, ensuring the best future for the US steel industry and all stakeholders.”
A spokesperson for Nippon Steel noted that June 18 is also the current expiration date of the acquisition contract between Nippon Steel and the US Steel Corporation.
During the last presidential election, both President Biden and incoming Republican President Trump opposed Japanese companies acquiring US steel manufacturers in a bid to win union votes.
The US Steel Corporation and Nippon Steel argued in the lawsuit that the CFIUS review was influenced by Biden’s long-standing opposition to the deal, depriving them of a fair review process. They requested the Federal Appeals Court to overturn Biden’s executive order to allow them a new review opportunity to attempt the merger again.
Treasury Secretary Yellen serves as the chair of the CFIUS panel, responsible for reviewing foreign acquisitions of US companies and other investment transactions for national security concerns.
CFIUS typically makes decisions directly on cases or submits recommendations to the president, but in the case of the US Steel and Nippon Steel, the panel failed to reach a consensus, leading to Biden’s final decision.
CFIUS rarely rejects deals involving close allies of the G7 countries, including Japan.
Japanese Foreign Minister Taro Kono recently expressed regret over the decision by President Biden to halt the sale on national security grounds during a recent meeting with outgoing US Secretary of State Antony Blinken.
He stated on a talk show on Japan’s NHK public broadcasting, “The broader context of the US-Japan alliance is extremely important, and handling this transaction properly to avoid disrupting the alliance relationship is crucial. Japan is the largest investor in the United States, and there is widespread unease in the business community, and I will continue to urge the US to address these concerns.”
(Reference from Reuters)