Washington (Reuters) – The Biden administration has announced a delay until June of an order for Nippon Steel to abandon its $14.9 billion bid for U.S. Steel, the companies disclosed on Saturday. This delay allows for further deliberation on the politically charged acquisition, giving both parties the opportunity to potentially revive the deal.
President Joe Biden initially blocked the acquisition on national security grounds on January 3rd. Treasury Secretary Janet Yellen recently confirmed that the proposed deal underwent a comprehensive review by the Committee on Foreign Investment in the United States (CFIUS), an interagency body.
The extension granted by CFIUS provides time for the legal challenge brought by the steelmakers against Biden’s order to be reviewed by the courts. Previously, the parties had a 30-day window to unwind the transaction.
In a joint statement, the companies expressed their satisfaction with the extended deadline until June 18, 2025, for permanently abandoning the transaction as stipulated in President Biden’s Executive Order. They emphasized their commitment to completing the deal, asserting that it is in the best interest of the American steel industry and all stakeholders involved.
June 18 marks the expiration date of the current acquisition contract between Nippon Steel and U.S. Steel, according to a spokesperson for the Japanese company. The White House, Treasury Department, and legal representatives for the United Steelworkers union, a vocal opponent of the deal, were not immediately available for comment.
The opposition to the Japanese company’s acquisition of the American steelmaker was a focal point in the electoral campaigns of both Biden and former President Donald Trump. The deal became a contentious issue as the candidates sought support from labor unions during the November election, ultimately won by Trump.
U.S. Steel and Nippon Steel filed a lawsuit on Monday, alleging that Biden’s longstanding opposition to the deal biased the CFIUS review, thus depriving them of a fair assessment. They sought intervention from a federal appeals court to overturn Biden’s decision and secure another review to proceed with finalizing the merger.
The CFIUS panel, chaired by the Treasury secretary, is responsible for evaluating foreign acquisitions of U.S. companies to address national security concerns. While CFIUS typically makes decisions independently or presents recommendations to the president, in the case of U.S. Steel-Nippon Steel, the panel was unable to reach a consensus, leading to Biden’s final ruling.
Instances of CFIUS rejecting deals involving closely allied countries from the Group of Seven, such as Japan, are infrequent. Japanese Foreign Minister Takeshi Iwaya expressed disappointment over Biden’s decision to block the sale on national security grounds, emphasizing the crucial nature of the Japan-U.S. alliance and the need to handle the transaction appropriately to maintain the partnership.
Iwaya highlighted Japan’s significant investment in the United States and urged the U.S. to address concerns within the business community to ensure a harmonious relationship between the two nations.
(Reporting by Alex Alper and Michael Mart
