President Joe Biden has delayed Nippon Steel's $14.9 billion planned takeover of United States Steel (X, Financials), citing national security concerns. The choice shows the administration's emphasis on maintaining domestic control over sectors important for the military and infrastructure of the country.
The Japanese steelmaker guaranteed no layoffs for at least a decade and large investments in the older American plants. Notwithstanding these guarantees, the United Steelworkers union and nonpartisan political leaders—including former President Donald Trump—who also supported closing the sale opposed the purchase.
Claiming the obstruction breached due process and might discourage foreign investment, Nippon Steel and U.S. Steel declared intentions to seek legal action after the ruling.
The market responded quickly; the stock price of U.S. Steel dropped 6.5% after the disclosure. Analysts speculate the choice would compel the business to rethink its approach, including a possible change from conventional blast furnace operations. The change might affect thousands of union employment.
There is increasing conjecture about other possibilities for U.S. Steel, including sales of corporate divisions should a single buyer fail to materialize or revived purchase offers from domestic companies like Cleveland-Cliffs Inc. (CLF, Financials).
