The Biden-Harris administration reportedly plans to block the planned sale of U.S. Steel to Japanese conglomerate Nippon Steel for $14.9 billion.
The reported move came despite U.S. Steel CEO David Barritt warning that the company would likely close steel mills and move its headquarters out of Pittsburgh if the federal government intervened to block the merger.
U.S. Steel shares plunged more than 20% following reports that the administration would block the merger.
President Joe Biden is preparing to announce that he will formally block Nippon Steel's acquisition of U.S. Steel. According to The Washington Post.
The president, Vice President Kamala Harris and former President Donald Trump have all voiced opposition to the deal.
Some lawmakers oppose the move on national security grounds, even though Japan is a longtime U.S. ally.
Pro-business groups such as the U.S. Chamber of Commerce have criticized Biden's stance, saying blocking the move would send a “chilling signal” to other foreign companies interested in investing in U.S. companies.
Earlier in the day, U.S. Steel warned that thousands of union jobs were at risk if its merger with Nippon Steel failed.
The company also suggested it might close some steel mills and move its headquarters out of western Pennsylvania, a key battleground state whose voters could have a major influence on the outcome of this year's presidential election.
Japan Steel's plan to buy a U.S. steelmaker has faced growing bipartisan opposition, and Harris said Monday she would like U.S. Steel to remain “American-owned and operated.”
Her Republican rival, Donald Trump, has promised to block the deal if elected.
Both Harris and Trump have been working hard to win over Pennsylvania voters, with each making several visits to the Keystone State.
“We hope that elected leaders and other key decision makers recognize the benefits of the agreement and the inevitable consequences if it fails,” Barritt said in a statement.
Burritt said U.S. Steel is counting on $3 billion in investment from Japan to survive as part of the nearly $15 billion acquisition.
Without a deal, he said, U.S. Steel would “have to significantly pivot away from its blast furnace facilities, putting thousands of well-paid union jobs at risk and negatively impacting many of the communities where its facilities are located.”
Japan has pledged to appoint the board on Wednesday. Once the sale is complete, it will affect the vast majority of Americans.
The company said U.S. Steel will be owned by New York-based Nippon Steel North America, which has “operated in the United States for more than 50 years.”
The United Steelworkers union opposes the proposed takeover.
Meanwhile, Mr Barritt praised the $15 billion deal and called the passionate opposition “puzzling and confusing”.
He said the sale would allow U.S. Steel to invest in its old steel mill in Gary, Indiana, and its Mon Valley plant near Pittsburgh, which the company has been forced to cut back on over the past decade to conserve cash.
U.S. Steel was planning to hold a worker rally at its Pittsburgh plant on Wednesday to promote the deal, in its latest attempt to sway public opinion.
For months, the company has been trying to persuade stubborn officials, including Pennsylvania Gov. Josh Shapiro, Sens. Bob Casey and John Fetterman and labor union leaders.
U.S. Steel has a total economic impact of $3.6 billion, supports 11,417 jobs and generates $138.2 million in state and local taxes. According to the 2023 U.S. Steel Impact Study.
While U.S. Steel has been trying to persuade politicians, Nippon Steel has been pushing its proposal forward.
The Japanese company announced in late August that it would invest more than $2.7 billion in U.S. Steel's Gary and Mon Valley plants, nearly double its original proposed investment.
The company also pledged to refrain from laying off any hourly employees through 2026.
The American steel company, founded in 1901 by Gilded Age tycoons Andrew Carnegie and JP Morgan, has faced financial difficulties over the past decade due to rising steel costs and falling prices.
