Nippon Steel Proposes U.S. Government Oversight in U.S. Steel Acquisition Efforts

Nippon Steel has made a significant proposal to grant the U.S. government veto power over any potential reductions in U.S. Steel's production capacity. This move is part of a final attempt to secure President Joe Biden's approval for its planned acquisition of the iconic American steel manufacturer. According to sources familiar with the matter, this proposal aims to alleviate concerns raised by the Committee on Foreign Investment in the United States (CFIUS), which previously indicated that the acquisition could negatively impact domestic steel production.

Following the news of this proposal, U.S. Steel's shares experienced a notable surge, rising by 14%--the most significant single-day increase in a year. As of the latest trading session, shares of U.S. Steel were priced at $34.19, although this remains well below Nippon Steel's offer of $55 per share.

Both Nippon Steel and U.S. Steel have refrained from commenting on the proposal, while the White House has acknowledged that it is currently reviewing the CFIUS report without providing further insights.

Last week, the U.S. national security panel's review of the proposed $14.1 billion acquisition reached a stalemate, leaving the final decision in President Biden's hands. Reports indicate that the president is inclined to oppose the takeover, emphasizing the need for U.S. Steel to remain under domestic ownership and operation. The president has a 15-day window to announce his decision following the referral.

The acquisition, initially unveiled in December 2023, has become a contentious topic in the U.S. presidential election, particularly due to pushback from the influential United Steelworkers union. However, some local union officials, mayors, and federal lawmakers have expressed support for the deal, urging President Biden to permit its progression.

The ongoing discussions reflect broader concerns regarding foreign investment in U.S. industries and the implications for national security, especially in critical sectors such as steel production. As the situation develops, stakeholders are closely monitoring the outcome of Nippon Steel's proposal and the potential impact on U.S. Steel's future.