US Steel Faces Uncertainty Amid Biden's Move to Block $14B Nippon Steel Takeover
Explore the latest developments as President Biden prepares to block Nippon Steel's $14 billion acquisition of US Steel, impacting the future of the iconic American steelmaker.
Important Highlights
- President Biden is reportedly set to block the $14 billion acquisition of US Steel by Japan's Nippon Steel.
- The Committee on Foreign Investment in the United States (CFIUS) has reviewed the deal over national security concerns.
- US Steel's CEO warns of potential plant closures if the deal falls through.
According to a Washington Post report, President Joe Biden plans to prevent the $14 billion takeover of US Steel (X) by Nippon Steel, triggering significant stock market fluctuations for the historic American steel company.
The Committee on Foreign Investment in the United States (CFIUS) has been examining the acquisition for potential national security risks. While their recommendation remains confidential, Biden must receive it before officially blocking the deal.
US Steel shares dropped 17% following the news but partially recovered during Thursday trading. The stock has declined approximately 40% year-to-date.
Jefferies analysts view the current pricing as a deep value opportunity, maintaining a "buy" rating despite lowering the price target from $47 to $41, representing a 40% premium over Wednesday's closing price.
US Steel CEO Warns of Plant Closures if Acquisition Blocked
US Steel CEO David Burritt told The Wall Street Journal that failure of the deal could lead to plant shutdowns and relocation of the company’s headquarters from Pittsburgh. His remarks followed Vice President Kamala Harris's support for keeping US Steel American-owned, a stance also shared by former President Donald Trump.
Burritt highlighted that Nippon Steel had pledged nearly $3 billion in investments toward modernizing US Steel’s older mills—a vital step for competitiveness and job retention. "We wouldn’t pursue these investments if the deal collapses," he said. "I don’t have the funds."
Meanwhile, the United Steelworkers union, based in Pittsburgh, opposes the acquisition and favored a $7.25 billion bid from domestic competitor Cleveland-Cliffs, which US Steel declined.
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