Nippon Steel to Get Extension on US Steel Plan

The U.S. Steel Corp. Clairton Coke Works facility in Clairton, Pa. (Justin Merriman/Bloomberg)

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A U.S. security panel has granted Nippon Steel Corp. permission to refile its plans to purchase United States Steel Corp., for $14.1 billion, likely pushing a decision on the politically contentious takeover past the U.S. elections in November, according to people familiar with the matter.

The extension effectively allows them to restart the clock, keeping the proposed transaction alive, even as President Joe Biden has vowed that U.S. Steel would remain American owned and is said to be preparing to kill the deal.

Despite the delay, the president has given no indication that he is waffling on his opposition to the proposed purchase. The people familiar spoke on condition of anonymity to discuss details of the review.

The takeover has become an election flashpoint, particularly in swing-state Pennsylvania, where both U.S. Steel and the United Steelworkers union — which opposes the sale — are based. The transaction was first announced in December.

USW International President David McCall reminds us that our solidarity is our greatest strength as we fight to enforce our contracts – even as U.S. Steel and Nippon pour money into massive PR and lobbying campaigns. Watch now: https://t.co/xrEbEplihp pic.twitter.com/ieZC8G9TO2 — United Steelworkers #EverybodysUnion (@steelworkers) August 12, 2024

Biden has opposed the acquisition for months, but stopped short of killing it, instead deferring to the review by the Committee on Foreign Investment in the United States, or Cfius. Vice President Kamala Harris and her Republican opponent, former President Donald Trump, also oppose the deal. Trump has said outright he would kill it.

The union downplayed the development.

“President Biden and Vice President Harris both stated unequivocally that they believe U.S. Steel should remain domestically owned and operated and have maintained firm support for USW members and their jobs,” United Steelworkers President David McCall said in a written statement. “Ultimately, nothing has changed regarding the risks that Nippon’s acquisition would pose to national security or the critical supply chain concerns that have already been identified.”

U.S. Steel didn’t immediately reply to a request for comment. It has said only its deal would lead to investment in unionized plants. Nippon Steel has promised $2.7 billion in investment on top of the purchase price. “A transaction with Nippon Steel is the best avenue to ensure that US Steel will be able to thrive well into the future,” the company said in a statement this month.

Japan’s Deputy Chief Cabinet Secretary Hiroshi Moriya refrained from commenting on the report of extension during a press conference on Sept. 18, but said that cooperation on economic security is key for both the U.S. and Japan.

“This whole deal has become a game” mired in politics, said SBI Securities Co. analyst Ryunosuke Shibata. The extension doesn’t guarantee the deal will materialize after the presidential election in November, he said.

Nippon Steel made the request to resubmit its filing, and Cfius agreed, according to people familiar with the matter. Cfius needs more time to understand the full national security import of the transaction, including to the resilience of critical supply chains, and engage with the parties, one of the people said.

Cfius is a secretive panel that scrutinizes proposals by foreign entities to purchase companies or property in the U.S. The panel’s reviews are typically aimed at adversaries such as China — not allied nations like Japan.

The existing deadline for a Cfius decision was Sept. 23, people familiar with the matter have said. The move to resubmit the application, which Cfius has to agree to allow, effectively starts a new 90-day clock, though a decision could come earlier.

“The president’s and the vice president’s position is that it is vital for U.S. Steel to remain an American steel company that is domestically owned and operated,” White House spokeswoman Saloni Sharma said in a statement Sept. 17. “The president told our steelworkers he has their backs, and he means it. There is no so-called ‘delay.’ We have not received any Cfius recommendation. The Cfius process was and remains ongoing.”

U.S. Steel has endured years of sluggish performance and has warned that its facilities require billions in new investment and that failing to complete the Nippon Steel sale could see some plants close and the company potentially moving its headquarters out of Pittsburgh.

Nippon Steel has indicated it does not plan to walk away from the deal voluntarily.