Joe Biden blocks US steel sales over security fears
The £11.4 billion sale of US Steel to a Japanese rival has been blocked by Joe Biden on national security grounds.
The US giant’s shares fell by around 7 percent in response to the outgoing US president’s decision to block the sale to Nippon Steel Corporation.
Biden said a strong U.S.-owned and operated steel industry is critical to national security, infrastructure, supply chains and key economic sectors such as auto manufacturing and defense.
He first signaled his opposition to the deal in March, saying yesterday: “This acquisition would place one of America’s largest steelmakers under foreign control and create risks to our national security and our critical supply chains.
“So that’s why I’m taking action to block this deal. US Steel will remain a proud American company – one that is American-owned and led by American union steelworkers.”
Even if Biden had unexpectedly gone through with the deal, as he was urged by both steel companies and the Japanese government, new President Donald Trump would have vowed to block it.
Opposition: Joe Biden said a strong US-owned and operated steel industry is critical to national security
Although the deal, which was announced over a year ago, has been called off, it may not be the end of things for US Steel and Nippon Steel. The terms of the deal include a break-fee clause of £455 million, to be paid by Nippon to US Steel in the event the company fails to obtain regulatory approval.
It has been reported in the Japanese press that Nippon CEO Eiji Hashimoto is prepared to sue the US government for political interference in the deal.
The US government’s intervention is in stark contrast to the recent British approach to foreign takeovers.
Labor nodded at the takeover of Royal Mail by Czech billionaire Daniel Kretinsky, while the steel sector is largely in foreign hands.
Yesterday it emerged that British Steel received a £360 million loan from Chinese owner Jingye in November.
The government is in discussions with Jingye about the future of British Steel’s sites in Scunthorpe and Teeside. The Chinese company wants taxpayer support to build green arc furnaces at the two locations.
However, as part of its worst-case scenario planning, the government has reportedly looked at nationalizing British Steel if talks fail.
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