US decision on Nippon bid for US Steel pushed back until after election

By Jeff Mason

(Reuters) -The U.S. national security panel reviewing Nippon Steel’s $14.9 billion bid for U.S. Steel will let the companies refile their application for approval of the deal, a person familiar with the matter said, delaying a decision on the politically sensitive merger until after the presidential election.

The move offers a ray of hope for the companies, whose proposed deal appeared set to be blocked when the Committee on Foreign Investment in the United States (CFIUS) alleged on Aug. 31 the transaction posed a risk to national security by threatening the steel supply chain for critical U.S. industries.

CFIUS needs more time to understand the deal’s impact on national security and engage with the parties, the person said on Tuesday. Refiling sets a new 90-day clock to review the proposed tie-up and make a decision.

Nippon Steel declined to comment. CFIUS and U.S. Steel did not immediately respond to requests for comment from Reuters.

“Extending the timeline takes some pressure off the parties and, importantly, pushes the decision past the election in November,” said Nick Klein, a CFIUS lawyer with DLA Piper.

The deal has become a political hot potato. This month, Vice President and Democratic presidential candidate Kamala Harris said at a rally in Pennsylvania, the swing state where U.S. Steel is headquartered, that she wants U.S. Steel to remain “American owned and operated.”

The White House said on Tuesday that President Joe Biden and Harris continued to believe that U.S. Steel should remained domestically owned and operated.

Harris’ Republican rival Donald Trump has pledged to block the deal if elected. Both candidates have sought to woo union votes.

The United Steelworkers Union, which vehemently opposes the deal, said on Tuesday “nothing has changed regarding the risks that Nippon’s acquisition would pose to national security or the critical supply chain concerns that have already been identified.”

CFIUS is concerned Nippon Steel’s merger could hurt the supply of steel needed for critical transportation, construction and agriculture projects, it said in its August letter to the companies, exclusively obtained by Reuters.

It also cited a global glut of cheap Chinese steel, and said that under Nippon, a Japanese company, U.S. Steel would be less likely to seek tariffs on foreign steel importers. It added that decisions by Nippon could “lead to a reduction in domestic steel production capacity.”

In a 100-page response letter to CFIUS, Nippon Steel said it will invest billions of dollars to maintain and boost U.S. Steel facilities that otherwise would have been idled, “indisputably” allowing it to “maintain and potentially increase domestic steelmaking capacity in the United States.”

The company also reaffirmed a promise not to transfer any U.S. Steel production capacity or jobs outside the U.S. and would not interfere in any of U.S. Steel’s decisions on trade matters, including decisions to pursue trade measures under U.S. law against unfair trade practices.

The deal, Nippon added, would “create a stronger global competitor to China grounded in the close relationship between U.S. and Japan.”

The expected demise of the deal in late August prompted an outpouring of support, including a letter from business groups such as the U.S. Chamber of Commerce, raising concerns the transaction was being influenced by political pressure.