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Key Takeaways
- U.S. Steel Corp. shares tumbled almost 13% Wednesday after reports saying President Joe Biden will raise concerns about Nippon Steel’s $14.9 billion purchase of the steelmaker.
- The president is expected to issue a statement on the deal ahead of a visit from Japan’s prime minister, Fumio Kishida, next month.
- Biden is expected to echo remarks from White House Economic Adviser Lael Brainard who said the president felt the acquisition deserved “serious scrutiny.”
U.S. Steel Corp. (X) shares sank on reports that President Joe Biden will voice concerns about Japan’s Nippon Steel Corp. acquiring the iconic American firm.
The Financial Times reported the president will express serious concerns about the deal, and issue a statement ahead of Japanese Prime Minister Fumio Kishida’s visit to Washington on April 10.
U.S. officials and lawyers already have drafted the comments, and the Japanese government has been notified, sources told the Financial Times.
In December, White House Economic Adviser Lael Brainard said Biden believed the purchase deserved “serious scrutiny,” and while it’s believed the president won’t say it should be blocked, he’s expected to take the same stance in his statement.
The $14.9 billion all-cash acquisition announced in December valued U.S. Steel shares at $55 each, a 40% premium at the time. Chief Executive Officer (CEO) David Burritt said the agreement benefits the U.S. by “ensuring a competitive, domestic steel industry while strengthening our presence globally,” in the wake of the announcement.
Former President Donald Trump, who is set to run against Biden in the next presidential race, has come out in opposition to the Nippon Steel transaction. Some in Congress also have voiced their concern, citing national security issues. The United Steelworkers Union also opposes the deal.
Shares of U.S. Steel dropped nearly 13% in trading Wednesday.