President Joe Biden's administration has delayed enforcing an order that blocks the acquisition of U.S. Steel by Nippon Steel until June, allowing time for a legal challenge initiated by the companies. The $14.9 billion deal faced rejection on national security grounds, marking a rare move by the Committee on Foreign Investment in the United States (CFIUS), which rarely opposes deals involving Group of Seven nations like Japan.
The CFIUS, chaired by Treasury Secretary Janet Yellen, conducted a "thorough analysis" of the proposed merger, yet failed to reach a consensus on whether to approve or reject it. This indecision left the responsibility to President Biden, who ultimately decided against the acquisition on January 3. The decision has sparked unease within the business community, considering Japan ranks as the largest investor in the United States.
"Japan is the largest investor in the United States. There is widespread unease within the business community, and I will continue urging the U.S. to alleviate these concerns," said Japanese Foreign Minister Takeshi Iwaya.
U.S. Steel and Nippon Steel argue that President Biden's longstanding opposition influenced the CFIUS review process. In response, they have filed a lawsuit seeking to overturn Biden's decision. The companies hope for a fresh review that could revive their chances of merging.
"We are pleased that CFIUS has granted an extension to June 18, 2025, of the requirement in President Biden's Executive Order that the parties permanently abandon the transaction," expressed U.S. Steel and Nippon Steel.
As the legal proceedings unfold, the current acquisition contract between the two steel giants remains set to expire on June 18. The delay gives courts time to examine the legal challenge while raising questions about how this decision might affect future international investments involving closely allied nations.
Japanese Foreign Minister Takeshi Iwaya expressed regret over the decision, emphasizing the importance of maintaining strong U.S.-Japan relations and ensuring that such transactions are handled with care to avoid disrupting this alliance.
"The broader context of the Japan-U.S. alliance is extremely important, and it is essential to handle this transaction appropriately to avoid disrupting it," stated Japanese Foreign Minister Takeshi Iwaya.
"We look forward to completing the transaction, which secures the best future for the American steel industry and all our stakeholders," declared Nippon Steel.
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