(Bloomberg) — President Joe Biden plans to formally block the $14.1 billion sale of United States Steel Corp. to Nippon Steel Corp. on national security grounds once the deal is referred back to him later this month, people familiar with the matter said.
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The Committee on Foreign Investment in the United States panel, which has been reviewing the proposed takeover for much of this year, must refer its decision to Biden by Dec. 22 or 23, said the people, who asked to not to be identified discussing a confidential process.
It’s not clear exactly what the CFIUS review will say. However, any referral to the president suggests at least one member of the panel sees the deal posing a risk. Nippon Steel and US Steel are poised to pursue litigation over the process if Biden decides to block the merger, some of the people said.
The fate of the once-fabled US steelmaker has become a hot political issue since the company reached an agreement to be taken over by its Japanese suitor almost a year ago. US Steel has said the deal represents a lifeline and warned it may move its headquarters out of Pennsylvania and shutter some operations if the merger collapses.
Biden — born in US Steel’s home state of Pennsylvania — has long signaled opposition to the sale, and has said the company would remain domestically owned. At the same time, he has stopped short of a pledge to kill the deal, while President-Elect Donald Trump has promised repeatedly to block it.
“The President’s position since the beginning is that it is vital for US Steel to be domestically owned and operated,” White House spokesperson Saloni Sharma said. “The CFIUS process was and remains ongoing.”
Shares of US Steel tumbled as much as 22% and closed 9.7% lower at $35.26. “This transaction should be approved on its merits,” company spokeswoman Amanda Malkowski said.
Nippon Steel shares rose as much as 1.2% shortly after the open on Wednesday before trading little changed as of 12:52 p.m. in Tokyo.
“It is inappropriate that politics continue to outweigh true national security interests — especially with the indispensable alliance between the U.S. and Japan as the important foundation,” Nippon Steel said in a statement. “Nippon Steel still has confidence in the justice and fairness of America and its legal system, and — if necessary — will work with U.S. Steel to consider and take all available measures to reach a fair conclusion.”