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The Committee on Foreign Investment in the United States is reportedly split on whether Nippon Steel's $14.9 billion acquisition of U.S. Steel, kicking it over to the administration to take action.
President Joe Biden received the report Monday with 15 days to reach a decision. He has said he wants U.S. Steel to remain American-owned and is widely expected by industry and political observers to block the controversial deal, which faced bipartisan opposition in an election year in which steelworkers were concentrated in swing states.
"Nippon Steel has been informed by CFIUS that the Committee has referred this matter to President Biden after failing to reach a consensus on our transaction with U.S. Steel," Nippon Steel said in a statement. "During the 15-day period that the President has to make a final decision, we urge him to reflect on the great lengths that we have gone to address any national security concerns that have been raised and the significant commitments we have made to grow U. S. Steel, protect American jobs, and strengthen the entire American steel industry, which will enhance American national security. We are confident that our transaction should and will be approved if it is fairly evaluated on its merits."
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Both Nippon Steel and U.S. Steel have said they would pursue legal action if the administration bars the deal from taking place. They have argued it is in the best interest of all stakeholders, including communities with integrated mills like Gary that otherwise might not see as much investment.
U.S. Steel issued a statement similar to Nippon Steel's.
"The transaction between U.S. Steel and Nippon Steel enhances U.S. national and economic security through investment in manufacturing and innovation -- by a company based in one of the United States' closest allies -- and forges an alliance in steel to combat the competitive threat from China," the company said.
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U.S. Steel pointed to Nippon Steel promising nearly $1 billion in investments at Gary Works, including by relining or repairing its blast furnaces.
"This is a transaction that should be approved on its merits, and one that should be a model for 'friendshoring' investment," U.S. Steel said in its statement. "It is the best way, by far, to ensure that U.S. Steel, including its employees, communities, and customers, will thrive well into the future, and Nippon Steel has made extraordinary commitments, including over $2.7 billion of investments in our USW facilities, that will be in a binding legal agreement enforceable by the U.S. government, to ensure these virtues are realized. It is our hope that President Biden will do the right thing and adhere to the law by approving a transaction that so clearly enhances U.S. national and economic security."
The United Steelworkers union has vociferously opposed a deal, arguing that it would weaken domestic steel production and trade cases against foreign steel dumping. They've also argued it would continue U.S. Steel's strategy of investing big in non-union mini-mills while letting its union-represented integrated steel mills languish.
"Our union has been calling for strict government scrutiny of the sale since it was announced. Now it's up to President Biden to determine the best path forward," David McCall, the steelworkers' president, said in a statement Monday. "We continue to believe that means keeping U.S. Steel domestically owned and operated."
Chaired by Treasury Secretary Janet Yellen, CFIUS screens business deals between U.S. firms and foreign investors and can block sales or force parties to change the terms of an agreement to protect national security.
Congress significantly expanded the committee's powers through the 2018 Foreign Investment Risk Review Modernization Act, known as FIRRMA. In September, Biden issued an executive order broadening the factors the committee should consider when reviewing deals -- such as how they impact the U.S. supply chain or if they put Americans' personal data at risk.
-- The Associated Press contributed to this report.
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