U.S. panel allows Nippon Steel to resubmit buyout review request

WASHINGTON — The U.S. committee assessing whether Nippon Steel Corp's planned acquisition of United States Steel Corp poses any national security threat has allowed the Japanese producer to reapply for a review, a source familiar with the decision said Wednesday.

The panel's decision means the administration of President Joe Biden will be unable to block the plan, with any decision most likely now coming well after the U.S. election in November.

It also means that the two companies, which announced the $14.1 billion acquisition deal in December, will have more time to convince the U.S. government that their plan to create the world's third-largest steelmaker by volume does not pose a national security threat.

Despite the agreement between the two firms and strong shareholder support, the proposed merger has met stiff opposition from the United Steelworkers union. Biden and Vice President Kamala Harris, the Democratic presidential nominee, have also said U.S. Steel should remain domestically owned.

Former President Donald Trump, Harris' Republican rival for the White House, has said he will block the deal if elected.

U.S. Steel and the powerful labor union are both headquartered in Pittsburgh, Pennsylvania, a key battleground state in the Nov 5 election.

With votes from blue-collar workers and labor unions seen as critical in the tight race for the presidency, the deal has become a highly political issue.

According to the source, Nippon Steel will withdraw its filing with the Committee on Foreign Investment in the United States by next Monday. For approval to buy U.S. Steel, Nippon Steel will resubmit an application to the committee, also known as CFIUS, and its review will not likely conclude before the election.

Nippon Steel, the world's fourth-largest steelmaker, declined to comment on CFIUS' procedures.

Citing a person with knowledge of the matter, Reuters said CFIUS needs more time to understand the planned takeover's impact on national security.

The new development came after Nippon Steel Vice President Takahiro Mori met CFIUS members earlier this month in Washington and some media reports suggested that Biden was set to foil the sale on national security grounds.

CFIUS, chaired by Treasury Secretary Janet Yellen, is in charge of examining whether foreign investment transactions in U.S. companies pose a threat to national security.

Japan is a close U.S. ally, and Tokyo and Washington have been deepening cooperation to counter security challenges posed by China, including those related to supply chains and advanced technologies.

Should the U.S. administration decide to block the agreement between the two steelmakers, it would be a rare rejection of a proposed buyout by a company from Japan.

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