The Biden-Harris administration intends to block the proposed $14.9 billion sale of US Steel to Japanese conglomerate Nippon Steel, according to a report.
The reported move comes despite warnings from U.S. Steel Chief Executive Officer David Burritt that if the federal government steps in to block the merger, the company would likely close its steel mills and move its headquarters from Pittsburgh.
Shares of US Steel fell more than 20% following news that the administration would cancel the merger.
President Joe Biden is preparing to announce that he will formally block Nippon Steel from acquiring US Steel, According to the Washington Post.
The president, Vice President Kamala Harris and former President Donald Trump have all opposed the agreement.
Some lawmakers have also raised objections on grounds of national security, even though Japan is a long-standing US ally.
Pro-business groups such as the US Chamber of Commerce have criticized Biden's stance, saying that blocking the move would send a “dangerous signal” to other foreign companies interested in investing in American companies.
Earlier on Wednesday, US Steel warned that thousands of union jobs would be at risk if the merger with Nippon Steel did not go through.
The company also indicated it would close some steel mills and possibly move its headquarters out of western Pennsylvania — a crucial state where voters will have a significant impact on the outcome of this year’s presidential election.
Nippon's planned takeover of the U.S. steelmaker faces growing bipartisan opposition, with Harris saying Monday that she wants U.S. Steel to remain “American-owned and operated.”
His Republican rival Donald Trump has vowed to block the deal if he wins the election.
Harris and Trump have been making an intense effort to woo Pennsylvania voters — both have visited the Keystone State multiple times.
“We want elected leaders and other key decision makers to recognize the benefits of this agreement, while also understanding the inevitable consequences if this agreement fails,” Barritt said in a statement.
U.S. Steel relies on a $3 billion investment from Nippon to survive as part of a roughly $15 billion acquisition, Burritt said.
He said that without the agreement, U.S. Steel “will largely walk away from its blast furnace facilities, putting thousands of good-paying union jobs at risk (and) negatively impacting many communities in the locations where its facilities are located.”
Nippon pledged to appoint a board on Wednesday This will include a majority of U.S. citizens when the sale is completed.
The Japanese company said US Steel will be owned by Nippon Steel North America, its New York-based division “which has been operating in the United States for more than 50 years.”
The United Steelworkers union is opposed to the proposed takeover.
Barritt, meanwhile, praised the $15 billion deal and called the fierce opposition “troubling and confusing.”
He said the sale would allow U.S. Steel to invest in its aging mills in Gary, Indiana, and the Mon Valley Works plant near Pittsburgh — something the company has had to cut back on over the past decade to save cash.
U.S. Steel planned to promote the deal during a worker rally at its Pittsburgh plant on Wednesday in its latest effort to sway public opinion.
The company has spent months trying to win over stubborn officials — including Pennsylvania Governor Josh Shapiro, Senators Bob Casey and John Fetterman, and union leaders.
U.S. Steel has a total economic impact of $3.6 billion, sustains 11,417 jobs and generates $138.2 million in state and local taxes. According to the 2023 US Steel impact study,
While US Steel is trying to win over politicians, Nippon is making its offer more attractive.
The Japanese company announced in late August that it would invest more than $2.7 billion in U.S. Steel’s Gary and Mon Valley plants — nearly double its initial investment proposal.
The company has also pledged not to fire hourly workers until 2026.
The U.S. steel company — founded in 1901 by Gilded Age giants Andrew Carnegie and J.P. Morgan — has faced financial difficulties over the past decade as the cost of steel has soared and prices have fallen.
