Despite numerous meetings and calls with U.S. officials and three revised proposals aimed at addressing national security concerns, Nippon Steel has been unable to secure approval from a key panel overseeing its $14.9 billion bid for U.S. Steel, according to an exclusive letter reviewed by Reuters.
The letter, sent on Saturday, sets the stage for U.S. President Joe Biden, who has long opposed the deal, to block it. The Committee on Foreign Investment in the United States (CFIUS), reviews the deals for national security risks, and has a deadline on Dec. 23 to either approve the deal, or extend the review, or recommend Biden scuttle it.
The review of Nippon Steel’s $14.9 billion bid for U.S. Steel remains stalled, with the involved agencies unable to reach an agreement, according to a letter from the Committee on Foreign Investment in the United States (CFIUS) seen by Reuters. If the deadlock persists, the matter will be escalated to President Joe Biden for a decision.
The letter, dated Saturday and not previously reported, outlines Nippon Steel’s extensive outreach efforts since early September. These include four in-person meetings with CFIUS, three phone calls—one of which involved the Treasury and Commerce secretaries last Friday, and three proposed mitigation agreements aimed at addressing national security concerns.
Earlier on November 11th, the company had also announced a closure bonus for the employees of U.S. steel, a bonus of $5,000, less applicable withholdings and authorized or required deductions, following the closing of the transaction between the parties. It shows the lengths the companies have gone to try to win approval on the controversial merger, even as the letter signals the deal is likely doomed.
The White House did not provide an immediate response to a request for comment, while the Commerce Department, co-leading the deal’s review, and the Treasury Department, which heads CFIUS, declined to comment.
Nippon Steel said it has “engaged in good faith with all parties to underscore how the transaction will bolster American economic and national security by countering the threats posed by China.”
U.S. Steel said in a statement that Nippon Steel provides, “by far, the brightest future for U.S. Steel,” adding that no other party can make the billions in investments Nippon Steel has promised to make.
“This transaction with Nippon Steel is the only scenario where significant investments would occur across the unionized, integrated facilities, including in Mon Valley Works. We need to get the deal done,” said President and Chief Executive Officer of U. S. Steel, David B. Burritt in an official press release.
However, the proposed acquisition has faced oppositions from the U.S. since it was announced, by Both Biden and Donald Trump. The president of the United Steelworkers Union also opposes the tie-up.
Nippon Steel argued that its investments, as a company from an allied nation, would strengthen U.S. Steel’s production, securing a 90-day extension for the review. This pushed CFIUS’ decision until after the November elections, raising optimism among supporters that a less charged political environment might favor the deal’s approval.
However, CFIUS’ 29-page letter on Saturday suggests those hopes were likely unfolded.