United States Steel Corp Share Decline

Shares of United States Steel Corp (BVMF:USSX34) experienced a significant decline, dropping over 11% after news that President Joe Biden intends to block the company's $14.1 billion sale to Nippon Steel Corp due to national security concerns.

According to a report from Bloomberg, the Committee on Foreign Investment in the United States (CFIUS) is expected to refer its findings to President Biden by the end of this month, with a deadline of either December 22 or 23.

While the precise content of the CFIUS review remains unknown, a referral to the president typically indicates that at least one member of the panel views the deal as a potential risk. Both Nippon Steel and US Steel are reportedly prepared to initiate legal action if the merger is impeded by the President's decision.

The proposed acquisition has been under scrutiny for much of the year, and the White House and Treasury Department have declined to comment. However, US Steel spokesperson Amanda Malkowski advocated for the deal's approval based on its merits. Following the news, trading of US Steel shares was temporarily halted due to volatility after an initial 8.8% drop in New York.

Nippon Steel expressed confidence in the American legal system and readiness to collaborate with US Steel to ensure a fair outcome, emphasizing the importance of the US-Japan alliance. The company's statement criticized the role of politics in decisions impacting national security interests.

The potential collapse of the merger would have significant implications for US Steel, which has indicated that it might relocate its headquarters from Pennsylvania and close some operations if the deal does not go through.

President Biden, a Pennsylvania native, has previously voiced opposition to the sale, emphasizing the importance of US Steel remaining under domestic ownership. President-Elect Donald Trump has also promised to block the deal. The CFIUS process was extended in September, pushing the referral deadline to December and casting doubt on the deal's prospects post-election. Biden reaffirmed his position on September 27.

The United Steelworkers union, a significant player in the industry, has opposed the sale, and Vice President Kamala Harris supported Biden's stance during her campaign.

Rejection of acquisitions by companies from allied nations like Japan is uncommon for CFIUS. The announcement of President Biden's decision is pending, with a 15-day window to make a determination following the referral. No further extensions of the CFIUS review process are anticipated, which would otherwise defer the decision to the next administration.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.