Nippon Steel's $15 Billion Bid for U.S. Steel Faces National Security Roadblock

Shares of Nippon Steel surged after news that the White House is considering blocking its $15 billion takeover bid for U.S. Steel on national security grounds. The deal, facing bipartisan opposition, aims to boost Nippon's crude steel capacity and profits. Both companies are awaiting updates from U.S. officials.

Shares of Nippon Steel climbed on Thursday, outperforming the broader Nikkei index, following reports that the White House might block the company's $15 billion bid for U.S. Steel. Sources informed Reuters on Wednesday that U.S. President Joe Biden was nearing a decision to prevent Nippon Steel's acquisition due to national security concerns, amid growing bipartisan opposition to the deal, which the companies aimed to finalize by year-end.

Despite an initial drop of over 1% in early Tokyo trading on Thursday, Nippon Steel's shares rebounded to trade 1.5% higher by 0144 GMT, outpacing the flat Nikkei index. Meanwhile, U.S. Steel shares finished down 17.5%. The acquisition is expected to increase Nippon Steel's global crude steel capacity to 86 million tons annually, inching closer to its 100 million goal, and add 30-40 billion yen ($209-278 million) to its January-March 2025 quarterly profits.

To gain support from the influential United Steelworkers (USW) union, Nippon Steel has promised to relocate its U.S. headquarters to Pittsburgh, U.S. Steel's home base, invest over $2.7 billion in union-represented facilities, and ensure that the core senior management and majority of the board at U.S. Steel are U.S. citizens. Both companies stated they have yet to receive any updates from the Committee on Foreign Investment in the United States (CFIUS) and do not believe the acquisition poses national security risks.

"Japan is one of our most staunch allies," U.S. Steel said in a statement, emphasizing their intent to explore all legal options to ensure the transaction's closure. Nippon Steel echoed this sentiment, stressing that the U.S. government should handle the matter in accordance with the law. ($1 = 143.6500 yen)

(With inputs from agencies.)