US: Enforcement of order blocking Nippon Steel-US Steel deal delayed
What's the story
The Joe Biden administration has delayed an order that would have forced Nippon Steel to walk away from its $14.9 billion bid for US Steel. The delay, now extended until June, gives courts time to evaluate the steelmakers' legal objection against the order. The final verdict could have far-reaching consequences for both the American steel industry and diplomatic relations with Japan.
Security implications
Deal blocked due to national security concerns
The proposed acquisition was first blocked by Biden on January 3, citing national security concerns. This week, Treasury Secretary Janet Yellen confirmed the deal had undergone a comprehensive review by the Committee on Foreign Investment in the United States (CFIUS). The delay in enforcement now gives courts enough time to consider a legal challenge against Biden's order.
Future prospects
Steelmakers express optimism about transaction
In a joint statement, the companies said they were pleased with the extension given by CFIUS. They said, "We are pleased that CFIUS has granted an extension to June 18, 2025 of the requirement in President Biden's Executive Order that the parties permanently abandon the transaction." The firms remain optimistic about completing this transaction, which they believe secures a promising future for both stakeholders and the American steel industry.
Contract details
Acquisition contract set to expire in June
The existing acquisition contract between Nippon Steel and US Steel expires on June 18, a representative of the Japanese firm said. This date also marks the extended deadline given by CFIUS to abandon the transaction. The White House, Treasury Department, and a representative for the United Steelworkers union have not yet commented on this development.
Legal challenge
Steelmakers allege biased review in lawsuit
In a lawsuit filed earlier this week, US Steel and Nippon Steel alleged that the CFIUS review was biased as Biden has long opposed the deal. They argue this denied them a fair assessment and have appealed to a federal appeals court to overturn Biden's decision. This would pave the way for a new review and another opportunity at finalizing the merger.
Diplomatic response
Japan expresses regret over blocked sale
Separately, Japanese Foreign Minister Takeshi Iwaya has expressed his disappointment over Biden's move to block the sale on national security grounds. He emphasized the importance of maintaining a strong Japan-US alliance and urged for appropriate handling of this transaction to prevent any disruption. Iwaya also highlighted Japan's position as the largest investor in the US, and pledged to continue advocating for alleviation of concerns within their business community.