The administration of President Joe Biden gave more time to Nippon Steel to convince the federal government that the planned acquisition of U.S. Steel by the Japanese company will not be a threat to national security.
The two steelmakers would have three more months to make their case. The extension would also push the decision until after the November elections, according to a report on New York Times.
Nippon Steel would have to resubmit its case to the Committee on Foreign Investment in the United States (CFIUS), which is led by Treasury Secretary Janet L. Yellen, so that the latter may review the deal. The three-month extension would be used by the CFIUS to look into any national security concerns propounded by both houses.
The CFIUS would also scrutinize how the transaction would be impacting supply chains, based on the information divulged by those familiar with the developments. The anxiousness of the committee over national security issues was serious, the report said.
Both Biden and Democratic presidential nominee Kamala Harris have opposed the $14.9 billion agreement. US Steel warned recently it could shut its Pennsylvania headquarters and factories if the deal is blocked, after reports said Biden plans to stop the sale.
Pennsylvania assume significance as it is touted as the most critical swing state in the upcoming U.S. presidential election, which will see Harris locking horns with Republican Donald Trump.
According to Washington Post, the CFIUS review of the transaction was supposed to conclude by Sept. 23, and with a recommendation to the president.
However, an outcry over the potential political and economic consequences in the collapse of the deal has made the Biden administration think twice, resulting in the grant of the extended review, which would add 90 days more before the agency would be required to submit their recommendation.
A spokeswoman from the White House noted that there has been no delay since the CFIUS review is not done yet. The law states that the president may reject the transaction only after he receives the CFIUS recommendation.
Saloni Sharma, the White House spokeswoman said, "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."
When the planned takeover was made known, the United Steelworkers expressed their objection, believing that the Japanese firm would be favoring non-union plants located in the South.
However, with the objection of industry executives, including a number of union members, and some local officials in Pennsylvania, who expressed fear of losing the promised $2.7 billion investment in the plant's old blast furnaces, the Biden administration is willing to give the Japanese firm more time to prove that the transaction will not end up being a matter of national security.
