Washington Post reported on Thursday that President Joe Biden had decided to block Nippon Steel from acquiring US Steel for $15 billion. The Washington Post cited unnamed administration officials who were not authorized to discuss the issue publicly.
The Committee on Foreign Investment in the United States had referred the issue to the President earlier after failing to reach consensus.
Nippon Steel urged Biden, in a letter, to take into consideration the security measures that Nippon Steel has taken.
The company stated that it had made “significant commitments” to grow US Steel while ensuring national security.
US Steel had echoed this sentiment, highlighting that the deal benefits both US economic security and national security.
Nippon Steel faces a $565 million fine from US Steel.
The company may take legal action against the US Government as the merger has been blocked.
The acquisition is crucial to Nippon Steel’s expansion strategy. It aims to increase global steel production capacity to 85 million tonnes annually from 65 million metric tonns.
The company sees the merger as an important step in achieving its goal of exceeding 100 million tons of production.
The outcome of the vote will have a far-reaching impact on the global steel industry as well as US-Japan relations.
The United Steelworkers union expressed strong concerns about Nippon Steel’s latest proposal. This proposal offers the US government the right to veto any future reductions of US Steel’s production capacity, should the merger be approved.
Reuters reported that despite this concession, the union is still opposed to the merger. They claim Nippon Steel failed to commit to long-term commitments regarding maintaining production levels and investing in domestic capacity within integrated facilities.
In a Thursday statement, the union criticised the proposal.
“Protecting our capacity only means that we mothball our equipment and let it rust until it is impossible to restart.”
They described the proposal as “a Hail Mary pass doomed to fail.”
In earlier reports, Nippon Steel proposed that the US government oversee production cuts to try and win President Joe Biden’s approval for their acquisition of US Steel.
Nippon Steel has been facing increasing opposition from the Steelworkers’ union and political leaders.
The union has consistently opposed this merger, citing concerns about job security and the future domestic steel production.
US Steel responded to the union’s criticism by defending the deal.
This transaction is the best way to ensure that US Steel and its employees, customers, and communities continue to thrive for many years to come.
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