By Jeff Mason, Alexandra Alper and Katya Golubkova
WASHINGTON/TOKYO (Reuters) – The U.S. national security panel that reviewed Nippon Steel’s $14.9 billion bid for U.S. Steel let the companies resubmit their application for approval of the deal, a person familiar with the matter said the case, delaying a decision on the politically sensitive merger until after the November 5 presidential election.
The move offers a glimmer of hope for the companies, whose proposed cooperation appeared to be blocked when the Committee on Foreign Investment in the United States (CFIUS) claimed on August 31 that the transaction posed a risk to national security by threatening national security. steel supply chain for critical US industries.
CFIUS needs more time to understand the deal’s impact on national security and to engage with the parties, the person said Tuesday. Refiling will set a new 90-day clock to review the proposed agreement and make a decision.
The review was expected to take almost the full 90 days, another person familiar with the matter said.
Japanese public broadcaster NHK reported on Wednesday that Nippon Steel had refiled with CFIUS on Wednesday for its takeover plan for US Steel, citing people familiar with the matter.
Nippon Steel declined to comment. CFIUS and US Steel did not immediately respond to requests for comment from Reuters.
“Extending the timeline takes some pressure off the parties and, more importantly, it pushes the decision beyond the November election,” said Nick Klein, a CFIUS attorney at DLA Piper.
The deal has become a political hot potato. This month, Vice President Kamala Harris, the Democratic presidential candidate, said at a rally in Pennsylvania, the swing state where US Steel is headquartered, that she wanted US Steel to remain “American owned and operated,” following the opinion of President Joe. Biden.
The White House reiterated that position on Tuesday.
Harris’ Republican rival Donald Trump has vowed to block the deal if elected. Both candidates have tried to win union votes.
Delaying the decision until after the U.S. election will “lower” the political temperature but will not guarantee approval, said David Boling, a former U.S. trade official who is now an analyst at the Eurasia Group.
“Regardless of the CFIUS review, Nippon Steel must still reach an agreement with the United Steelworkers,” Boling said. “Without that, it’s very difficult to see this deal happening.”
The United Steelworkers Union, which strongly opposes the deal, said Tuesday that “nothing has changed regarding the risks the Nippon acquisition would pose to national security or the critical supply chain concerns already identified.”
The deal is being closely watched by Japan, a close US ally and its largest foreign investor.
“Further strengthening economic ties, including expanding mutual investments between Japan and the US… are essential for both countries,” Deputy Cabinet Secretary Hiroshi Moriya told reporters on Wednesday.
Nippon Steel shares rose 1.1% in afternoon trading in Tokyo. US Steel shares closed 0.4% lower on Tuesday.
ENSURE STEEL SUPPLY
CFIUS is concerned that the Nippon Steel merger could hurt the supply of steel needed for crucial transportation, construction and agricultural projects, according to an August letter to the companies, exclusively obtained by Reuters.
The report also cited a global glut of cheap Chinese steel and said U.S. Steel under a Japanese company would be less likely to demand tariffs on foreign steel importers. Nippon’s decisions could also “lead to a reduction in domestic steel production capacity,” the report said.
In a 100-page response letter to CFIUS, also exclusively obtained by Reuters, Nippon Steel said it will invest billions of dollars in otherwise idled US Steel facilities, allowing it to “indisputably” maintain and potentially increase domestic steelmaking capacity. in the United States.”
The company also reaffirmed a commitment not to transfer US Steel manufacturing capacity or jobs outside the US and not to interfere with US Steel’s decisions on trade matters, including decisions to take trade remedies under US law against unfair trade practices.
The deal, Nippon added, would “create a stronger global competitor to China, based on the close relationship between the United States and Japan.”
Robust CFIUS reviews take 90 days, but it is common for companies to withdraw and resubmit their filings so they have more time to address the panel’s concerns.
Last year, 18% of companies seeking deal approval resubmitted their applications, according to CFIUS’ 2023 annual report. Nippon Steel and US Steel filed for review in March and CFIUS allowed them to refile in June, triggering a second 90-day clock that expires on September 23, Reuters reported on Friday.
In December, CFIUS could approve the deal, possibly with measures to address national security concerns, recommend the president block it or extend the timeline again.
