The bid by Japan's Nippon Steel to acquire U.S. Steel has been granted an extension by the Biden Administration, allowing the companies more time to potentially complete the acquisition. The new deadline, set for mid-June, comes after President Joe Biden initially blocked the deal, citing national security concerns. However, the U.S. Committee on Foreign Investment in the United States (CFIUS) did not reach a consensus on the security issue.
U.S. Steel expressed optimism about the extended deadline, viewing it as an opportunity to finalize the transaction, which they believe will benefit the American steel industry and stakeholders. Following this news, U.S. Steel's shares rose nearly 7% when markets opened on Monday.
The proposed acquisition stirred political controversy during the election year, with both Biden and former President Donald Trump vowing to oppose the deal. Trump, who had previously expressed his opposition to a foreign company acquiring U.S. Steel, reiterated his stance after Biden's decision to block the acquisition.
Legal experts suggest that a new CFIUS and a new president are not bound by Biden's decision, leaving room for the deal to potentially proceed under different terms. The extension of the deadline by CFIUS is considered unusual, with speculation that there may be differing opinions within the Biden administration regarding the security implications of the acquisition.
Nippon Steel and U.S. Steel have maintained that the deal does not pose a national security threat and have criticized Biden's decision as a violation of due process. The two companies have taken legal action against parties they believe worked to derail the acquisition.
While the United Steelworkers union has raised concerns about the deal, citing potential job cuts and labor agreement violations, some union members support the acquisition. Nippon Steel has emphasized its commitment to investing in U.S. Steel's facilities to enhance competitiveness in the steel industry, particularly against Chinese dominance.
U.S. Steel has warned that without Nippon Steel's investment, they may shift production methods and relocate their headquarters. The outcome of the acquisition now rests on further review by CFIUS and potential decisions by the current administration.
