As leaked yesterday, Joe Biden has come out against Nippon Steel’s proposed purchase of US Steel, saying it is “vital” for the “iconic American steel company” to remain “domestically owned and operated”.
In a statement on Thursday, Biden said that “it is important that we maintain strong American steel companies powered by American steel workers."
“US Steel has been an iconic American steel company for more than a century, and it is vital for it to remain an American steel company that is domestically owned and operated. It is important that we maintain strong American steel companies powered by American steel workers. I told our steel workers I have their backs, and I meant it.”
Biden’s statement marks a rare presidential intervention in a transaction that outside an election year would have drawn less public scrutiny. Despite its storied history, US Steel’s role in the economy has diminished over several decades, a period during which producers in Asia have risen to dominate the global steel market. And while Nippon Steel’s proposed $14.1 billion acquisition targets an iconic business name, a takeover in the US commodities industry by a company based in a friendly country is hardly unusual.
Biden’s intervention came one day after the Financial Times first reported that he was preparing to voice concerns about the Japanese group’s proposed $14.9bn acquisition of the Pennsylvania-based steelmaker, which sent the stock of the company (with the ticker X which Elon Musk would love to get his hands on for IPO time) lower.
It also comes less than a month before Japanese Prime Minister Fumio Kishida is due to arrive in Washington for a state visit on April 10. The US president has looked to Japan as a bulwark against China in the Asia-Pacific region, but the senile president's opposition to the deal deal could strain the two countries’ relationship.
The White House issued Biden’s statement as he campaigns in Michigan and Wisconsin, two Midwestern industrial strongholds that are crucial for him to win in November. Presumptive Republican nominee Donald Trump is vying for the same blue-collar workers in those states as Biden and has pledged to block the deal outright.
US Steel’s shares fell 2.5% on Thursday after tumbling 13% on Wednesday when news first broke that Biden would "express concern" about the deal.
The shares are now trading at levels last seen before the Nippon deal was announced in December, suggesting investors are increasingly skeptical about its chances of success amid an ongoing federal review.
According to Bloomberg, Biden was silent on the pending review of the deal by the Committee on Foreign Investment in the United States, or CFIUS, and stopped short of an outright pledge to block it. CFIUS is led by the Treasury Department, and has the power to approve, block or amend the deal on national security grounds, or send it to Biden for a decision.
Timna Tanners, an analyst at Wolfe Research LLC, said the deal suffered from the “unfortunate timing” of being brokered in the midst of an election in which both candidates have vowed to bolster domestic manufacturing and use their power to stop jobs from going overseas.
“The deal is facing a much more difficult chance of going through now that Biden has come out against it,” she said. “It’s an alarming precedent that the US government is setting."
Of course, this particular government has set so many "alarming precedents", it has become impossible to keep count.
