(This March 14 article has been republished to correct the spelling of Cleveland-Cliffs (NYSE:) CEO Lorenzo Goncalves’ last name in paragraph 9)
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, should remain a domestically owned U.S. firm, President Joe Biden said on Thursday, expressing his first clear opposition to the deal.
“US Steel has been an iconic American steel company for more than a century, and it is vital for it to remain a domestically owned and operated American steel company,” the president said in a statement.
However, it was not immediately clear whether Biden would use any U.S. regulatory authorities to derail the deal. The Committee on Foreign Investment in the United States (CFIUS), an influential group that reviews foreign investment in American 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 US Steel’s key 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 U.S. Steel, labor unions, the entire American steel industry and America’s national security.”
“We are moving forward through regulatory review, including CFIUS, while trusting the rule of law, objectivity and due process that we expect from the U.S. government. We are committed to seeing this through and completing the deal,” the statement said.
The Japanese firm also said in its initial statement that there would be no layoffs or plant closures until September 2026 under certain conditions, but later re-released its statement indicating that there would be no layoffs or plant closures as a result of the deal.
U.S. Steel shares fell again on Thursday, down 18% in two days to $38.26 on concerns that Biden will voice his opposition. This is well below the proposed deal price of $55 per share. The company was not available for comment.
Separately, Cleveland-Cliffs CEO Lourenco Goncalves said Thursday that he would consider another bid for United States Steel (NYSE:), likely for no more than $30 a share, if the Nippon Steel deal falls apart.
Cleveland-Cliffs was among the bidders to buy US Steel.
U.S. opposition to the deal could overshadow the April 10 summit between Biden and Japanese Prime Minister Fumio Kishida, which aims to strengthen the long-standing security alliance between their countries in the face of China’s growing influence.
Biden, who is running for re-election this year and relies on unions as a key part of his political support, also called United Steelworkers International President David McCall on Thursday. He reaffirmed his support for the steelworkers, the White House said.
McCall said Biden’s remarks should end debate over the deal.
“Allowing one of our nation’s largest steel producers to be purchased by a foreign corporation leaves us vulnerable when it comes to meeting both defense and critical infrastructure needs,” he said in a statement.
CFIUS met with the parties to discuss the deal, a source familiar with the matter said.
The Treasury Department, which heads CFIUS, did not immediately respond to a request for comment, and the White House declined to comment on whether Biden planned to use his powers to block the deal.
Nippon Steel agreed to take “all necessary actions” to obtain CFIUS approval and pay US Steel a $565 million breakup fee if it fails to do so, according to a January filing.
Art Hogan, chief market strategist at B Riley Wealth in New York, said there are always challenges when foreign companies want to buy U.S. corporations, but Nippon Steel faced difficulties, in part due to time constraints.
“In an election year, it will be challenging to ensure that all stakeholders are happy with the acquisition of a USA-made icon,” Hogan added.