President Joe Biden said Friday that he has decided to block a $15 billion takeover of U.S. Steel by the Japanese company Nippon Steel, capping off a yearlong business saga that drifted into election-year politics.
The decision comes after a national security review by a Treasury Department committee failed to reach a consensus on the deal and referred the final decision to the president in December. NBC News had reported in September that Biden was preparing to block the takeover.
The president, who leaves office in little more than two weeks, faced a challenging political calculus over the fate of the iconic Pittsburgh-based firm: Allowing a foreign entity with far greater resources to take it over could put the business on stabler financial footing. But keeping U.S. Steel in American hands risked the company’s survival under intense foreign competition.
“As I have said many times, steel production — and the steel workers who produce it — are the backbone of our nation,” Biden said in a statement. “A strong domestically owned and operated steel industry represents an essential national security priority and is critical for resilient supply chains. … Without domestic steel production and domestic steel workers, our nation is less strong and less secure.”
U.S. Steel’s stock price dropped sharply on the news, declining 8% in pre-market trading Friday.
The roughly 11,000-worker company, founded in 1901, has dwindled since its heyday, when it employed a peak of roughly 340,000 during World War II. Its stock price has barely edged higher since the 1990s as cheaper steel production abroad, especially in Asia, ramped up.
When reached for comment Thursday night, a spokesperson for U.S. Steel referred to a previous statement, saying that the deal “enhances U.S. national and economic security through investment in manufacturing and innovation,” going on to argue that the transaction would “combat the competitive threat from China.”
“It is the best way, by far, to ensure that U. S. Steel, including its employees, communities, and customers, will thrive well into the future,” the spokesperson said. “It is our hope that President Biden will do the right thing and adhere to the law by approving a transaction that so clearly enhances U.S. national and economic security.”
Nippon Steel, Japan’s largest steelmaker, did not immediately respond to a request for comment.
The potential blocking of the deal had raised concerns that it could harm U.S. relations with Japan, a key U.S. ally and the country’s largest foreign investor.
There was no immediate comment from officials in Japan, where Friday was a bank holiday. Japanese government officials have previously declined to comment on matters concerning the management of individual companies but said it is essential for the U.S. and Japan to strengthen economic relations, “including the expansion of mutual investment.”
American and international business groups have also criticized what they say is the politicization of the deal.
The proposed acquisition drew controversy almost as soon as it was announced in December 2023, with Biden saying in a statement that month that it “appears to deserve serious scrutiny in terms of its potential impact on national security and supply chain reliability.”
Biden and Vice President Kamala Harris, the Democratic presidential nominee, both campaigned against the proposed acquisition, saying U.S. Steel should remain American-owned.
President-elect Donald Trump has also expressed opposition to the sale, saying in December that he would block the bid and revive U.S. Steel through a combination of tax incentives and tariffs.
Nippon Steel tried to assuage politicians’ concerns, saying in a statement in September that U.S. Steel would remain an American company owned by Nippon Steel North America. Nippon Steel also said that Americans would make up the majority of the board of directors of U.S. Steel, and that the American company, under its new ownership, would stay headquartered in Pittsburgh.
“Nippon Steel will prioritize production at U. S. Steel to meet the demand in the U.S. steel market,” Nippon Steel said.
Arata Yamamoto and CNBC contributed.