((Automated translation by Reuters, please see disclaimer https://bit.ly/rtrsauto))
(Adds additional background) by Alexandra Alper
US President Joe Biden followed through on Friday on his promise to block Nippon Steel 5401.T’s $14.9 billion bid for US Steel national security.
The long-awaited move cuts off a key source of capital for the embattled American icon, which has said it would have to close key factories without the nearly $3 billion investment promised by the Japanese company.
It is also the latest chapter in a high-profile national security review, led by the Committee on Foreign Investment in the United States (CFIUS), which examines investments from the perspective of national security risks and which had until December 23 to approve, extend the deadline or recommend that Mr. Biden block the agreement.
The proposed rapprochement has faced high-level opposition in the United States since it was announced a year ago, with Mr Biden and his successor Donald Trump lashing out as they sought to woo voters union workers in the state of Pennsylvania, where US Steel is headquartered, which is in the process of changing. MM. Both Trump and Biden have said the company should remain American-owned.
Both companies sought to allay concerns over the merger. Nippon offered to move its U.S. headquarters to Pittsburgh, where the U.S. steel mill’s headquarters are located, and promised to honor all existing agreements between U.S. Steel and the USW.
The merger appeared on the verge of being blocked after the companies received a letter on August 31 from CFIUS (), seen by Reuters, arguing that the deal could harm the supply of steel needed for the carrying out essential projects in the fields of transport, construction and agriculture.
But Nippon Steel countered that its investments, made by a company from an allied country, would in fact support US Steel’s production, and obtained a 90-day extension of the review. The extension gave CFIUS until the end of the November elections to make a decision, fueling the hope of supporters of the deal that a calmer political climate could favor approval of the deal.
But those hopes were dashed in December, when CFIUS paved the way for a blockade by Mr. Biden in a 29-page letter, citing national security risks that would have gone unaddressed, Reuters reported exclusively.
JAPANESE SUPPLICATIONS
In November, Japanese Prime Minister Shigeru Ishiba urged Biden to approve the merger to avoid spoiling recent efforts to strengthen ties between the two countries, Reuters exclusively reported.
A spokesperson for Mr. Ishiba could not be reached for comment Friday ahead of Mr. Biden’s statement. Japan is a key U.S. ally in the Indo-Pacific region, where China’s growing economic and military power has raised concerns in Washington, as have threats from North Korea.
Nippon Steel aimed to increase its global production capacity to 85 million metric tons per year from the current 65 million, moving closer to its long-term goal of increasing its capacity to 100 million tons.
U.S. Steel has already said the failure of the deal would put thousands of jobs at risk and it could be forced to close some steel mills, a claim the USW union called baseless threats and intimidation. .
