Biden says U.S. Steel must remain domestically owned and operated

U.S. Steel Corp, which has agreed to be bought by Japan's Nippon Steel for $14.9 billion, must remain a domestically owned and operated American firm, President Joe Biden said on Thursday, opposing the proposed merger.

U.S. Steel Corp, which has agreed to be bought by Japan's Nippon Steel for $14.9 billion, must remain a domestically owned and operated American firm, President Joe Biden said on Thursday, opposing the proposed merger. The United States needs to "maintain strong American steel companies powered by American steelworkers," Biden said.

"U.S. Steel has been an iconic American steel company for more than a century, and it is vital for it to remain an American steel company that is domestically owned and operated," the president added in a statement. Shares of U.S. Steel were down 1.6% in early afternoon trading on Thursday. The company was not immediately available for comment.

"There are always complications when foreign companies look to buy U.S.-based corporations, and this deal is no different," said Art Hogan, chief market strategist at B Riley Wealth in New York. "In an election year, it will be a heavy lift to get all the stakeholders comfortable with the acquisition of a U.S. manufacturing icon," Hogan added.

Reuters, citing a source, had reported on Wednesday that Biden had plans to express concern over the proposed deal to buy the 122-year-old steelmaker. The issue has the potential to overshadow an April 10 summit between Biden and Japanese Prime Minister Fumio Kishida aimed at boosting the long-standing security alliance between their countries in the face of growing Chinese strength. It was not immediately clear whether Biden would use any U.S regulatory authorities to scuttle the deal. The Committee on Foreign Investment in the United States (CFIUS), a powerful panel that reviews foreign investments in U.S. companies, is studying the proposed merger, Bloomberg reported. It could recommend that the president block it over national security concerns.

A January filing showed Nippon Steel assuaged U.S. Steel's concerns that the deal might not survive CFIUS scrutiny by committing to "all actions required" to obtaining committee clearance, and to paying U.S. Steel a $565 million breakup fee if it failed to do so. The White House had said Nippon Steel's proposed acquisition deserved "serious scrutiny" after some U.S. lawmakers said the deal threatens the supply of steel and jobs in the United States.

The Treasury Department, which leads CFIUS, did not immediately respond to a request for comment, and the White House declined to comment on whether Biden planned to use its powers to block the deal. Nippon Steel clinched a deal to buy the American steelmaker for a hefty premium in December, betting that U.S. Steel would benefit from the spending and tax incentives in Biden's infrastructure bill.