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Nippon Steel Slams ‘Inappropriate’ Politics In US Deal

The deal, valued at $14.9 billion including debt, is under scrutiny in Washington AFP

Nippon Steel & Sumitomo Metal Corp on Wednesday slammed “undue” political influence on its plan to acquire U.S. Steel Corp following media reports that U.S. President Joe Biden would block the acquisition.

The deal, valued at $14.9 billion including debt, is under review by a Washington agency that reviews foreign acquisitions of U.S companies.

Bloomberg News, citing people familiar with the matter, said Biden plans to cancel the deal on national security grounds after the review is completed later this month.

“It is inappropriate to continue to allow politics to take precedence over genuine national security interests – especially with the indispensable U.S.-Japan alliance as its foundation,” Nippon Steel said in a statement.

The statement added: “We worked in good faith with all parties to highlight how this transaction will strengthen U.S economic and national security by countering the threat posed by China.

Nippon Steel & Sumitomo Metal Corporation remains confident in the fairness and justice of the United States and its judicial system and – if necessary – will work with U.S. Steel to consider and take all available steps to reach a just conclusion.”

The two companies reached an agreement on the acquisition about a year ago.

U.S. Steel said it needed the deal with Nippon Steel to ensure adequate investment in the Pennsylvania plants and warned it might have to close them if the deal was blocked.

The takeover was fiercely condemned by the United Steelworkers union, despite Nippon Steel’s promises to invest to keep its Pennsylvania plant competitive and to build new “mini-mills” in the southern United States.

When the deal was first announced, Biden said it was “critically important” that U.S steel companies be domestically owned and operated”.

He also said in March: “I told our steelworkers I had their back, and I meant it.

Even so, days after the U.S election in November, Nippon Steel & Sumitomo Metal said it expected to complete its acquisition of the company by the end of the year, while Biden is still in office.

US President-elect Donald Trump – who will take office on January 20 – has also vowed to block the deal and has pledged to support US steel companies with tax breaks and tariffs.

“I am totally opposed to the once great and powerful United States Steel being bought by a foreign company,” Trump wrote on his Truth Social platform earlier this month.

In response to the Bloomberg report, the White House said Biden is awaiting the results of an ongoing review by the Committee on Foreign Investment in the United States (CFIUS), chaired by Treasury Secretary Janet Yellen.

“The president’s position from the beginning has been that American steel must be owned and operated domestically,” said spokeswoman Robyn Patterson.

“We have not received any CFIUS recommendations. The CFIUS review process is ongoing.”

U.S. Steel shares fell 9.7 percent at the close of trading on Wall Street on Tuesday following the report. Japanese steelmaker shares fell 0.4 percent in Tokyo on Wednesday.

Japanese government spokesman Yoshimasa Hayashi declined to comment directly on the agreement but said Japan and the United States would continue “extensive” discussions on economic issues.

“Strengthening Japan-U.S economic ties, including expanding mutual investment, is vital to both sides,” Hayashi said.

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