[Simone Del Rosario]

Despite the Japanese company’s best efforts to downplay national security concerns, the US government is poised to reject Nippon Steel’s $15 billion acquisition of U.S. Steel. And it’s not necessarily because of something a politician had to say, though one may have the final say.

The Committee on Foreign Investment in the United States reviews deals like this based on national security. CFIUS just sent a letter to Japan’s Nippon setting the stage for President Joe Biden to block the deal. That’s according to Reuters, who has seen the letter.

CFIUS has until Monday to either approve the deal, recommend the president block it or extend the review further.

The CFIUS panel is split on the issue. The letter says if they can’t come to an agreement before the deadline, they’ll recommend Biden step in, and Biden has indicated he would block it.

Nippon has been working overtime to ease fears and get approval. Reuters reports executives have held four in-person meetings with CFIUS, and multiple phone calls with officials, including one last week with the Treasury and Commerce Secretaries. They’ve also put forward three proposals to mitigate the negative impact of the deal.

In its letter to Nippon, CFIUS writes…

“The Committee has not yet reached consensus on whether the mitigation measures proposed by the Parties would be effective… or whether they would resolve the risk to U.S. national security arising from the Transaction.”

It added “The President may take such action for such time as the President considers appropriate to suspend or prohibit a covered transaction that threatens to impair the national security,” according to Reuters
.
It’s rare for a deal coming from a close U.S. ally like Japan to be blocked on the grounds of national security.

As the clock runs out, both companies involved have taken their pleas for approval to the communities where they work.

“This represents a path to the middle class. We need this deal.”
“It’s a no lose situation. Time is running out. And this has to get done.”

Takashiro Mori: We Have been clear from the outset. There will be no Job loss or plant closure because of hte deal. If anything. We will need more steelworkers to meet our vision for the future.

Simone Del Rosario: Reports that President Biden has been getting ready to block the deal have been floating around since September. While he has let the review play out, he’s been pretty clear about his opposition.

President-elect Donald Trump also opposes the deal.

Donald Trump: I will stop Japan from buying United States Steel. We have a foreign country that wants to purchase one of our greatest. They shouldn’t be allowed to buy it. We have to make it work. Have to make it work. You don’t want to sell U.S. Steel.

Simone Del Rosario: In a statement to Straight Arrow News, U.S. Steel said, “The transaction with Nippon Steel provides, by far, the brightest future for U.S. Steel, our employees and communities, and our customers.”

“No other party can do this, and U.S. Steel will not – and does not have the resources – to do this on our own.”

That sentiment echoes comments from U.S. Steel CEO David Burritt last month.

David Burritt: Well if we were going to paint a picture of the best deal, this would be it, because it checks all the boxes in terms of strengthens national security, strengthens economic security, strengthens job security. In fact, there’s opportunity to grow jobs as a result of the big investment. So you look at each one of those things that’s thumbs ups across the board.

Simone Del Rosario: Meanwhile, Nippon told Reuters it “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.”