The purchase of United States Steel Corp by a Japanese company “appears to deserve serious scrutiny,” President Joe Biden’s top economic adviser said, the latest sign of political pressure over the deal.
Nippon Steel Corp on Monday announced it would buy US Steel for $14.1 billion to create the world’s second-largest steel company. But the proposed acquisition has drawn concern or outright opposition from prominent Democrats and union leaders with longtime ties to Biden.
“The purchase of this iconic American-owned company by a foreign entity — even one from a close ally — appears to deserve serious scrutiny in terms of its potential impact on national security and supply chain reliability,” Biden economic adviser Lael Brainard said in a statement Thursday.
US Steel is proactively seeking a national security review in a bid to calm opposition. Approval by the Committee on Foreign Investment in the United States, or CFIUS, is a condition of its deal, according to a filing with the Securities and Exchange Commission.
The administration “will be ready to look carefully at the findings of any such investigation and to act if appropriate,” Brainard said.
Nippon Steel told Bloomberg News on Monday it is confident on clearing regulatory hurdles, pointing to Japan’s strong relationship with the US.
“I don’t have any concern about passing CFIUS,” Nippon Steel Executive Vice President Takahiro Mori said. Later that morning in a conference call, US Steel Chief Executive Officer David Burritt told analysts he did not believe the deal would face any problems receiving approval from regulators.
Biden is facing demands in 2024 battleground states in the nation’s industrial heartland to scrutinize the sale or block it altogether. Pennsylvania’s two senators, both Democrats, wrote Treasury Secretary Janet Yellen, who leads the CFIUS process, saying the deal should be killed.
The proposed merger strikes at two pillars of Biden’s political identity: his claim to be the most pro-union president in US history and to be a trust-buster.
The United Steelworkers of America has urged regulators to review the deal to determine if it benefits workers and serves US national security interests, union President David McCall said in a statement. McCall on Thursday praised Brainard’s comments about the deal’s effects on the company’s unionized workforce.
“Our union shares many of the concerns expressed in today’s White House statement, including how this deal may impact the future of domestic steel production,” McCall said.
Biden’s new rules designed to crack down on mergers could also be put to the test by the US Steel sale. The Justice Department and Federal Trade Commission on Monday finalized sweeping new guidelines meant to prevent companies seeking to dominate their industries by snapping up rivals.
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