The Biden administration is close to announcing it will block Nippon Steel’s acquisition of U.S. Steel, two sources familiar with the situation said on Wednesday, amid growing bipartisan political opposition to the US$14.9 billion deal.
The panel that is reviewing the proposed merger for national security reasons has not sent its recommendation to the president, the White House said.
The Washington Post first reported the thinking of the administration of President Joe Biden. Shares of U.S. Steel fell 19 per cent.
The Treasury Department, which is overseeing the national security approval process for the deal, declined to comment.
U.S. Steel had earlier warned on Wednesday that a failure to merge with Nippon Steel would put thousands of U.S. union jobs at risk and signaled that it would close some steel mills and potentially move its headquarters out of the politically important state of Pennsylvania.
Nippon’s planned acquisition of the U.S. steelmaker faces opposition from Democrats and Republicans, with Vice President Kamala Harris on Monday saying she wants U.S. Steel to remain “American owned and operated.” Her Republican rival Donald Trump has pledged to block the deal if elected.
Pennsylvania is a crucial battleground state that could sway the outcome of the 2024 presidential election and both candidates are making repeat visits there.
“We want elected leaders and other key decision makers to recognize the benefits of the deal as well as the unavoidable consequences if the deal fails,” U.S. Steel CEO David Burritt said in a statement. Employees will hold a rally later on Wednesday outside its headquarters in favor of the deal, the statement said.
He said that without the deal, “U.S. Steel will largely pivot away from its blast furnace facilities, putting thousands of good-paying union jobs at risk (and) negatively impacting numerous communities across the locations where its facilities exist.”
He added that the failure of the deal would raise “serious questions about U.S. Steel remaining headquartered in Pittsburgh.” He told the Wall Street Journal it would likely move its headquarters to the south if the deal collapsed.
The United Steelworkers union criticized Burritt, accusing him of “making baseless and unlawful threats.”
“Today’s pathetic attempt to orchestrate a rally in downtown Pittsburgh shows that U.S. Steel is becoming increasingly desperate to save the deal,” the union said.
The Trump campaign did not immediately respond to a request for comment on the U.S. Steel comments. The Harris campaign declined to comment as well.
Nippon Steel said last week that it plans to invest over US$2.7 billion in union-represented facilities at Mon Valley Works in Pennsylvania and Gary Works in Indiana in support of the future of manufacturing for those communities.
U.S. Steel said that if the deal does not get approved it “would not make the same financial commitments.” The steelmaker has cut jobs in recent years including in Michigan.
Nippon said earlier on Wednesday that the core senior management as well as a majority of board members at the U.S. company would be U.S. citizens if the deal goes ahead.
Nippon’s planned US$14.9 billion acquisition has received all regulatory approvals from outside the United States and a green light from U.S. Steel’s shareholders. It is now under regulatory review in the United States.