Thomas Barwick
Update 6:25 pm: US Steel statement added.
US Steel (New York Stock Exchange:X) plummeted by 18% on reports that President Joe Biden is preparing to block the deal with Nippon Steel (OTCPK:NPSCY), according to multiple media reports.
The Biden administration has concluded that the more than 14 The $1 billion sale of US Steel will pose a national security risk that cannot be mitigated by American and Japanese groups, according to the FT reportciting several people familiar with the matter. The Washington Post and Bloomberg also reported that Biden is preparing to block the merger.
According to the FT, Biden is expected to make a decision to block the deal in the coming days. The Committee on Foreign Investment in the United States, which was evaluating the deal for national security concerns, recently informed Nippon Steel (OTCPK:NPSCY) that the deal raised national security concerns that could not be overcome.
A White House official declined to comment to the Washington Post, though he said in a statement that CFIUS has not yet transmitted its recommendation to Biden.
US Steel (X) said it has not received any updates or executive orders regarding the CFIUS process, according to a statement emailed to Seeking Alpha Wednesday evening.
“We continue to maintain that there are no national security concerns associated with this transaction, as Japan is one of our staunchest allies,” US Steel said in the statement. “We look forward to pursuing all possible options under the law to ensure that this transaction closes, which represents the best future for Pennsylvania, the American steel industry and all of our stakeholders.”
White House press secretary Karine Jean-Pierre said Wednesday that CFIUS has not yet made a recommendation on the U.S. Steel deal.
Biden has said for months that he is against the $14 billion acquisition of US Steel (X), although he has not openly called for the transaction to be blocked.
US National Security Council spokesman John Kirby said on Wednesday that Biden believes US Steel (X) should remain American-owned. He could not confirm reports that Biden would block the steel deal.
The latest update on the steel acquisition saga comes after Vice President Kamala Harris said Monday that US Steel (X) should remain domestically owned and operated during a visit to Pittsburgh. Former President Donald Trump reiterated last month that he would block the deal if he gets the top U.S. job.
Earlier on Wednesday, US Steel CEO David Burritt said the company would close steel mills and likely move its headquarters out of Pittsburgh if its planned sale to Nippon Steel (NPSCY) falls through.
In an interview with The WSJBurritt said the nearly $3 billion that Nippon Steel (OTCPK:NPSCY) has committed to investing in US Steel’s (X) older plants is critical to keeping them competitive and preserving workers’ jobs.
“We wouldn’t do that if the deal falls through,” Burritt told the WSJ newspaper“I don’t have the money.”
US Steel (X) shares were trading at $39.33 on Dec. 15, the day before Nippon Steel (OTCPK:NPSCY) announced its earnings.