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- President Joe Biden said he wants U.S. Steel to remain domestically owned, signaling opposition to the company’s $14.9 billion acquisition by Japanese rival Nippon Steel.
- Federal regulators and the president have the ability to block foreign acquisition of U.S. companies, though that power is rarely used.
- Biden has often aligned himself with labor unions, who have also opposed the acquisition.
The chances of America’s second-largest steel company being bought by a Japanese conglomerate took a hit Thursday after President Joe Biden weighed in against the deal.
As widely expected, Biden said he was against foreign ownership of U.S. Steel (X), though he did not directly mention whether he would do anything to block the $14.9 billion acquisition of U.S. Steel by Nippon Steel.
“It is important that we maintain strong American steel companies powered by American steelworkers,” Biden said in an emailed statement. “U.S. Steel has been an iconic American steel company for more than a century, and it is vital for it to remain an American steel company that is domestically owned and operated.”
U.S. Steel shares have tumbled the past two sessions after the Financial Times reported that Biden would voice concerns about the deal. On Thursday, the stock fell 6.4% to $38.26, trading at its lowest level since just before the deal was announced in mid-December.
In opposing the sale, Biden sided with the United Steelworkers union, which has criticized the deal since it was announced. While Nippon Steel said it would honor existing union contracts, the workers’ organization said it did not believe the company “understands the full breadth of the obligations of all our agreements, and we do not know whether it has the capacity to live up to our existing contract.”
Biden, who is courting the support of unions during an election year, has called his White House “the most pro-union administration in American history.”
Nippon Steel executives have launched a campaign to win over the union by promising to upgrade existing U.S. Steel facilities, and avoid any layoffs until at least 2026, according to a report by the Wall Street Journal. U.S. Steel would also retain its name and headquarters in Pittsburgh, the heart of America’s once world-leading but now greatly diminished steel industry.
That campaign has yet to be successful—union leaders quickly released a statement applauding Biden’s call for the company to remain domestically owned.
Should Biden ultimately step in to shut down the deal, it would be an unusual move. The government body that regulates such transactions, The Treasury Department’s Committee on Foreign Investment in the United States, rarely blocks transactions. The president has blocked foreign acquisitions only six times since 2008, according to the Treasury Department.