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(This March 14 article has been rearchived to correct the spelling of Cleveland-Cliffs (NYSE:) CEO Lourenco Goncalves’ last name in paragraph 9)
By Trevor Hunnicutt and Alexandra Alper
WASHINGTON (Reuters) – U.S. Steel Corp, which agreed to be bought by Japan’s Nippon Steel for $14.9 billion, must remain a domestically owned American company, President Joe Biden said on Thursday, expressing for the first time explicit opposition to the agreement.
“US Steel has been an iconic American steel company for more than a century, and it is critical that we remain a nationally owned and operated American steel company,” the president said in a statement.
However, it was not immediately clear whether Biden would use U.S. regulators to scuttle the deal. The Committee on Foreign Investment in the United States (CFIUS), a powerful panel that reviews foreign investments in U.S. companies, has the power to recommend blocking the deal on national security grounds.
The White House said in December that the proposed acquisition merited “serious consideration” given U.S. Steel’s critical role in steel production, which is critical to national security.
Nippon Steel said in a statement Thursday that the acquisition will bring “clear benefits to US Steel, union workers, the American steel industry overall, and America’s national security.”
“We are proceeding through regulatory review, including CFIUS, with confidence in the rule of law, objectivity and due process that we expect from the United States government. We are determined to see this through and complete the transaction,” he said .
The Japanese company also said in an initial statement that there would be no layoffs or plant closures until September 2026 under certain conditions, but later reissued its statement saying there would be no layoffs or plant closures as a result of the transaction.
US Steel shares slumped again on Thursday and fell 18% in two days to $38.26 on fears that Biden might voice his opposition. This is well below the proposed offering price of $55 per share. The company was not immediately available for comment.
Separately, Cleveland-Cliffs CEO Lourenco Goncalves said Thursday he would consider another bid for United States Steel (NYSE:) likely worth no more than $30 a share if the Nippon Steel deal goes through in pieces.
Cleveland-Cliffs was among the bidders for US Steel.
U.S. opposition to the deal could overshadow an April 10 summit between Biden and Japanese Prime Minister Fumio Kishida aimed at strengthening the long-standing security alliance between their countries in the face of growing Chinese influence.
Biden, who is running for re-election this year and has courted unions as a key element of political support, also called United Steelworkers International President David McCall on Thursday. He reiterated that he has “the steelworkers’ backs,” the White House said.
McCall said Biden’s statements should end debate over the deal.
“Allowing one of our nation’s largest steel producers to be purchased by a foreign-owned company leaves us vulnerable when it comes to meeting both our defense and critical infrastructure needs,” he said in a statement.
CFIUS has met with the parties to discuss the settlement, a person familiar with the matter said.
The Treasury Department, which leads CFIUS, did not immediately respond to a request for comment, and the White House declined to comment on whether Biden intended to use his powers to block the deal.
According to a January statement, Nippon Steel pledged to take “all necessary actions” to obtain CFIUS clearance and to pay US Steel a $565 million termination fee if it fails to do so.
Art Hogan, chief market strategist at B Riley Wealth in New York, said there are always complications when foreign companies try to buy U.S.-based companies, but Nippon Steel faced an uphill battle largely because of the timing .
“In an election year, it will be a tall order to make all stakeholders comfortable with the acquisition of an icon of U.S. manufacturing,” Hogan added.