By Alexandra Alper and Katya Golubkova
WASHINGTON (Reuters) – Nippon Steel's $15 billion bid for U.S. Steel has been sent to U.S. President Joe Biden, a White House spokesman said, giving the president 15 days to make a decision on the bond he previously said he opposed.
The Committee on Foreign Investment in the United States (CFIUS), which reviews foreign investment in the US for national security risks, sent the request to Biden after it was unable to reach an agreement.
“We have received the CFIUS review and the President will review it,” a White House spokesman said. President-elect Donald Trump, who is set to return to office on Jan. 20, has also opposed the deal, which was first announced last December.
Nippon Steel said Tuesday it was notified of the CFIUS letter.
We urge him (Biden) to think about the lengths we have gone to address any national security concerns raised and the important commitments we have made to grow US Steel,” Nippon Steel said in a statement.
Nippon Steel and US Steel previously said they plan to close the deal before the end of 2024.
The Washington Post first reported the posting to Biden on Monday.
CFIUS said on Monday that allowing Nippon Steel to take over US Steel could result in lower domestic steel production that represents a “national security risk”, according to the Washington Post.
Nippon Steel said it could mitigate that risk by appointing Americans to senior management and board positions at US Steel, but the committee was divided on whether those remedies would be sufficient, the newspaper said.
The US Treasury Department, which leads CFIUS, and the Commerce Department, declined to comment.
The deal, critical to Nippon Steel's global expansion, also faces opposition from the United Steelworkers, a powerful labor union that was key to both Democrats and Republicans in the swing state of Pennsylvania during the Nov. 5 presidential election.
The union is concerned that Nippon Steel could import steel into the US from its international mills, destroying the company that helped build the Empire State Building and the allied forces in World War II.
Nippon Steel has previously denied it would use the deal as insurance for steel imports and has made a series of promises to protect jobs and invest in US facilities it sees as vital to its future growth.
“The US Steel deal is a once-in-a-lifetime opportunity for Nippon Steel to drive its growth,” said SBI Securities analyst Ryunosuke Shibata.
The US is the only developed nation where domestic steel demand is increasing, with high steel prices around the world due to production volume falling short of domestic demand, he added.
With US Steel, Nippon Steel aims to increase its global steel production capacity to 85 million metric tons per year from 65 million tons now and the asset is key to its goal of raising production capacity to more than 100 million tons in the long term.
Nippon Steel faces a $565 million fine from US Steel if the deal falls through, which would be a major blow to the Japanese steelmaker's expansion overseas. It has previously said it may pursue legal action against the US government if the deal falls apart.
As Japan is the largest foreign investor in the US, Japanese Prime Minister Shigeru Ishiba last month sent a letter to Biden asking him to approve Nippon Steel's acquisition of US Steel.
“The transaction … improves the security of the country and the US economy by investing in production and innovation – it is a company based on one of the closest allies of the United States – and creates an alliance with steel to fight the competitive threat from China,” US Steel. he said in a statement.