David Burritt, chief executive of U.S. Steel, has warned that the company could lay off workers and relocate its headquarters outside Pennsylvania if the deal were blocked.
Credit...Erin Schaff/The New York Times

Biden Administration Extends Review Period for Nippon Takeover of U.S. Steel

U.S. Steel’s chief, David Burritt, expressed confidence on Tuesday that the sale of the American manufacturer to a Japanese owner would close “on its merits” despite bipartisan backlash.

by · NY Times

The Biden administration is granting a request by Japan’s Nippon Steel to resubmit its filing with the Committee on Foreign Investment in the United States for approval to purchase U.S. Steel, people familiar with the matter said on Tuesday.

The decision gives the two steel makers an additional three months to convince the federal government that the transaction does not pose a threat to national security, as argued by both Democrats and Republicans. It also pushes the decision on a transaction that had gotten caught up in election year politics until after the November presidential election.

CFIUS will use the additional time to review the deal so that it can better understand the full national security impact of the transaction, along with how it would impact critical supply chains and to continue talks with both companies, the people familiar with the process said. The committee continues to have serious national security concerns about the takeover, the people said, and is expected to use close to the full 90 days allowed in the extended review period to make its determination.

A White House spokeswoman said that President Biden and Vice President Kamala Harris continue to believe that U.S. Steel should remain American owned and operated.

“The president told our steelworkers he has their backs, and he means it,” said Saloni Sharma, the White House spokeswoman. “There is no so-called ‘delay.’ We have not received any CFIUS recommendation. The CFIUS process was and remains ongoing.”

The move by CFIUS came on the same day that David Burritt, the chief executive of U.S. Steel, offered a forceful defense of the proposed merger, saying the tie-up would strengthen America’s national security. Mr. Burritt also expressed confidence that the federal government would allow the deal to close despite bipartisan calls to block it.

Mr. Burritt argued that if the acquisition moved forward, the new company would benefit the United States economy and allow both it and Japan, a key ally, to better compete with China in global steel markets.

“By the time we’re done doing all the analysis, it’s very clear that it strengthens national security, economic security and job security,” Mr. Burritt said. “This deal will close on its merits.”

His comments, made at the Detroit Economic Club, came as U.S. Steel has been facing a political storm over Nippon’s $15 billion takeover bid. Top Republicans and Democrats, Mr. Biden, Ms. Harris and former President Donald J. Trump, have said that the iconic steel maker should remain American owned and operated. The United Steelworkers union has accused Mr. Burritt of misleading workers and trying to get a lucrative exit package that would come from selling the company.

The transaction has also become tangled with swing state politics, as U.S. Steel is based in Pennsylvania, which could help to determine the outcome of the November presidential election.

The Biden administration signaled this month that it was preparing to block the deal before November. Following public criticism from business groups that the review process was being politicized, officials suggested last week that a decision could be delayed until after the election.

Mr. Burritt dismissed the negative talk about the deal on Tuesday and insisted that it would benefit American workers.

He also laid out the implications for U.S. Steel if the deal were to be thwarted. Mr. Burritt said the company would continue to focus its resources on “mini mills” that it operates in the South rather than the larger facilities in Pennsylvania and Indiana that Nippon has said it will upgrade.

Describing the company’s current strategy as “better, not bigger,” Mr. Burritt said, “with Nippon, it would be better and bigger.”

Mr. Burritt has warned that the company could lay off workers and relocate its headquarters outside Pennsylvania if the deal were blocked.

Critics have said that the deal could threaten national security by ceding a key part of America’s manufacturing supply chain to a foreign-owned company. Biden administration officials have also raised concerns that if Nippon controls U.S. Steel, it could raise objections to American tariffs on steel imports.

Mr. Burritt noted that Japan is America’s closest ally in Asia and argued that the deal would curb China’s steel dominance.

“Bringing Nippon’s expertise with U.S. Steel’s footprint here in the United States — that investment coming in — gives us an opportunity to really compete with China,” he said.

Nippon’s bid for U.S. Steel, which was accepted in December, continues to face strong opposition from the powerful steelworkers’ union. The union has expressed fears about the future of its pension program and raised doubts that Nippon will make the investments in U.S. Steel facilities that it has promised.

In a letter to its members on Tuesday, the leaders of the steelworkers’ union reiterated their problems with Nippon’s proposal.

“The U.S. government should reject the deal for obvious and important national defense reasons,” David McCall, president of United Steelworkers, and Mike Millsap, chairman of the negotiating committee, said in the letter. “We must remain united as we fight to keep U.S. Steel an American steel company that is domestically owned and operated.”

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