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TAKEAWAYS KEY
- Shares of U.S. Steel are dropping in premarket trading Friday on reports that President Joe Biden has decided to block the $14.1 billion sale of the iconic American company to Japan's Nippon Steel.
- Bloomberg reported that The White House planned to make the announcement on Friday. The New York Times said the White House rejected the agreement because it deemed the transaction to be a threat to national security.
- US Steel's future is seen in doubt if Biden rejects the deal.
U.S. Steel’s (X), shares are down 9% Friday morning in premarket trade on news that Joe Biden, the president of the United States of America has blocked the $14 billion sale to Japan Nippon Steel.
The White House is planning to announce the decision on Friday, Bloomberg reported, which said both companies have "signaled that they planned to pursue legal action if Biden formally blocked the deal."
Bidend's rejection of the deal will be based on the view that the sale poses a threat to national security, The New York Times reported, and could hurt relations with Japan, a close U.S. ally and a big investor in the country.
Last month, U.S. regulatory officials failed to reach an agreement on whether or not to approve the acquisition of the Japanese firm by the U.S. company. President Biden made the final decision.
US Steel's Future Seen in Doubt If Biden Nixes Deal
David Burritt warned that the American firm could move its headquarters out of Pittsburgh and close down plants if government blocked the sale.
The future of U.S. Steel would take a hit if the deal was rejected. The company had rejected an offer from Cleveland-Cliffs, which later bought Stelco (a Canadian steel manufacturer).
Neither U.S. Steel or Nippon Steel responded immediately to an Investopedia comment request.
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