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Takeaways from the Key Notes
- Shares of U.S. Steel sank in intraday trading Friday as President Joe Biden blocked the $14.1 billion sale of the iconic American company to Japan's Nippon Steel.
- The White House announced the decision Friday, with the rejection based on the view that the sale posed a threat to national security.
- U.S. Steel and Nippon Steel said they would pursue legal action against the government.
- US Steel's future is seen in doubt now that Biden has rejected the deal.
Shares of U.S. Steel (X) sank in intraday trading Friday as President Joe Biden blocked the $14.1 billion sale of the iconic American company to Japan’s Nippon Steel.
White House made the announcement on Friday. The decision was based upon the belief that this sale would pose a danger to national security.
"As a committee of national security and trade experts across the executive branch determined, this acquisition would place one of America’s largest steel producers under foreign control and create risk for our national security and our critical supply chains," Biden said.
U.S. Steel and Nippon Steel said in a joint statement that they would pursue legal action against the government.
"Following President Biden’s decision, we are left with no choice but to take all appropriate action to protect our legal rights, " the two companies said.
The New York Times warned that, even before a formal blockade of the transaction, it could damage U.S. relationships with Japan. Japan is an important ally of ours and one of our biggest investors.
The U.S. government regulators could not agree whether the Japanese acquisition should go ahead last month and President Biden was left to make the decision.
US Steel's Future Seen in Doubt
David Burritt, CEO of the American Steel Company in Pittsburgh, warned against plant closings and possible relocation of the American headquarters if the Government blocked the sale.
U.S. Steel’s future is tarnished by the decision to reject this transaction. The firm had earlier rejected a bid from Cleveland-Cliffs. This company then bought Stelco, a Canadian Steel Company.
UPDATE—Jan. 3, 2025: This article has been updated to include Nippon Steel and U.S. Steel's response and fresh share prices.
President Biden's statement blocking the deal.
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