The latest news indicates that the Committee on Foreign Investment in the United States (CFIUS) reviewing the acquisition of US Steel by Nippon Steel, a Japanese company, for $14.1 billion, will allow the two companies to resubmit their transaction approval application. This means that the politically controversial deal will not be decided until after the November US election.
According to sources cited by Reuters, the Foreign Investment Committee needs more time to understand the impact of this transaction on national security and to communicate with relevant parties. After the resubmission of the application, the committee will have 90 days to review the transaction and make a decision.
The Washington Post reported that on Tuesday, the Foreign Investment Committee made the decision to extend the review. The committee was originally scheduled to formally recommend to the White House whether to block the transaction by next Monday (September 23), and this extension will allow officials to postpone the decision until after the election.
This move brings a ray of hope to both companies. At the end of August, the Foreign Investment Committee warned the two companies in a letter that their proposed cooperation would weaken the US steel supply chain, thus threatening national security.
Japanese steel giant Nippon Steel announced in December last year that it would spend approximately 2.1 trillion yen (about $14.1 billion) to acquire US Steel. However, opposition from labor unions and President Joe Biden has filled the prospects of the deal with variables and uncertainties.
In March this year, Biden openly opposed the deal, stating that the United States needs to maintain a strong US Steel company driven by American steelworkers. Despite Biden’s months-long opposition to the deal, he did not intervene to stop the acquisition but instead handed it over to the Committee on Foreign Investment, a subsidiary of the US Treasury Department, for review.
The acquisition has become a hot topic in the US election, especially in the swing state of Pennsylvania, where US Steel and the United Steelworkers union, who oppose the acquisition, are located.
Republican presidential nominee Donald Trump and Democratic vice presidential nominee Kamala Harris have both expressed opposition to the deal.
Last week, Reuters reported, based on sources, that Nippon Steel Vice President Takahiro Mori and US Steel CEO David Burritt met with senior US officials on September 11 in an attempt to salvage the acquisition.
On Wednesday, some US business groups wrote to Treasury Secretary Janet Yellen expressing concerns about the political pressure on the review of the acquisition, stating, “We are concerned that the procedures of the Committee on Foreign Investment are being used to advance political agendas beyond its jurisdiction, putting the US economy and workers at risk.”
However, Nippon Steel and US Steel countered in a 100-page letter, stating that the deal would actually enhance US steel production by allowing an allied company to inject much-needed cash into a struggling US critical industry company.
US Steel has struggled financially for years and has warned that its facilities require billions of dollars in new investments. If the deal with Nippon Steel does not go through, some factories may close, and the company’s headquarters may move out of Pittsburgh.
On Tuesday, US Steel CEO Burritt, in an interview with the Detroit News, said that despite the resistance from President Biden, the president-elect, and the union, he expects the company to eventually be sold to Nippon Steel.
After speaking at the Detroit Economic Club, Burritt stated, “We are confident in the success of the sale transaction… Working with a Japanese company, our strategy is to be better, bigger, provide greater security for our jobs, and offer more opportunities for our employees, customers, and everyone along the way.”