Nippon Steel and U.S. Steel Appeal to Biden on $15 Billion Merger Amid National Security Concerns

Nippon Steel and U.S. Steel have formally reached out to President Joe Biden regarding their proposed $15 billion merger, a move spurred by recent reports suggesting the U.S. administration might block the deal. The letter, sent on Sunday, is signed by Nippon Steel CEO Eiji Hashimoto and U.S. Steel CEO David Burritt, alongside other key executives from both companies.

While specifics of the letter’s content have not been disclosed, the communication underscores the urgency of the merger discussions, which have faced significant hurdles from various stakeholders. The merger, a cash deal proposed by Japan’s largest steelmaker to acquire the 123-year-old American steel company, has encountered resistance from Biden, the United Steel Workers (USW) union, and several members of Congress.

Opposition to the merger extends beyond political figures to include both major presidential candidates. Republican nominee Donald Trump and Democratic nominee Kamala Harris have expressed concerns, particularly as U.S. Steel’s headquarters is located in Pennsylvania, a crucial swing state in the upcoming election.

The Committee on Foreign Investment in the United States (CFIUS) raised national security alarms about the merger in an August 31 letter, highlighting potential risks to the supply of steel essential for critical infrastructure, transportation, construction, and agriculture projects.

In a bid to address these concerns, top executives from Nippon Steel and U.S. Steel met with senior U.S. officials last Wednesday. The results of this high-level meeting remain unclear.

Adding to the complexity, the Japan Business Federation and several U.S. business groups have expressed concerns about potential political influences on the national security review. They argue that such pressures could unduly affect the outcome of the merger review.

Japanese Minister of Economy, Trade, and Industry, Ken Saito, refrained from commenting directly on the deal, citing concerns about interfering in U.S. domestic affairs. However, he emphasized the importance of continued transactions between Japanese and U.S. companies, framing such deals as vital to the strong economic ties between the two nations.

The resolution of this high-stakes merger will likely depend on the administration’s assessment of national security risks versus the economic benefits and strategic interests involved.