Headline
Biden Stops $15 Billion U.S. Steel Deal with Japanese Firm Nippon, Shares Decrease Significantly
President Joe Biden has effectively halted the controversial acquisition of U.S. Steel by its Japanese rival Nippon Steel, revoking a $14.9 billion deal, including debt, that was announced in 2023, causing U.S. Steel shares to nosedive.
Main Points
"U.S. Steel will continue to be a pillar of American might—a company owned, operated, and managed by American workers—the cream of the crop globally," Biden said in a statement issued on Friday morning.
Biden emphasized the need to safeguard American steelworkers and the country's security as the reasons behind his decision.
U.S. Steel's stock plummeted 8% in premarket trading, hitting $30, significantly lower than the $55 per share agreement between the steel companies.
Notable Quote
Biden justified his decision by stating that it was his "duty to impede foreign ownership of this crucial American company" as "this acquisition would incur risks for our national security and our critical supply chains," according to the statement.
Background Information
U.S. Steel, a symbol of American capitalism, was founded in 1901 by renowned industrialists Andrew Carnegie, J.P. Morgan, and Charles Schwab, soon becoming the first U.S. company to exceed a value of $1 billion. However, the Pittsburgh-based metal manufacturer lost its dominance in the American steel industry from the 20th century as the sector faced hardships.
Importance of U.S. Steel Deal
U.S. Steel has voiced concerns that moving its headquarters away from Pittsburgh and potentially losing "thousands of well-paid union jobs" may be imminent without the Nippon takeover. This claim seems at odds with Biden's self-proclaimed title as the "most pro-union president ever." The deal drew criticism from across the political spectrum, with President-elect Donald Trump expressing his opposition to the steel merger in a post on his Truth Social platform: "I am firmly against the once-mighty U.S. Steel being acquired by a foreign company."
Additional Note
The Committee on Foreign Investment in the United States failed to reach a consensus recommendation on the Nippon Steel takeover by Dec. 23, providing Biden with 15 days to decide whether or not to approve the deal. The $55 per share price offered by Nippon Steel was a 40% premium compared to U.S. Steel's $39 share value at the time of the merger announcement, a premium often seen in mergers and acquisition activities. U.S. Steel's stock soared 25% to around $50 soon after the merger announcement, only to dip below its pre-deal price by autumn as doubts about the deal's fate mounted.
Nippon Steel's proposed acquisition of U.S. Steel, valued at $14.9 billion, was called off by President Joe Biden, citing national security concerns. As a result, U.S. Steel's shares saw a significant drop, falling by 8% in premarket trading to $30. Biden's decision was in line with his statement, asserting that it was his duty to prevent foreign ownership of critical American companies. This situation puts U.S. Steel, a historic symbol of American capitalism, in a challenging position, with potential implications for its headquarters and union jobs.
