US President Joe Biden Blocks Sale of US Steel to Nippon Steel

Shares in Nippon Steel dropped over 1% on Monday following U.S. President Joe Biden's decision to block the company's $14.9 billion acquisition of U.S. Steel, citing national security concerns. The decision, which followed a year-long review, poses a significant challenge to the growth plans of Japan's largest steelmaker.

Despite the setback, the decline in Nippon Steel's stock price was limited as the possibility of rejection had already been anticipated. U.S. Steel shares had been trading below the offer price for some time, reflecting investor skepticism about the deal.  

Nippon Steel's shares fell 1% to 3,151 yen in early Monday trading, compared to a 0.3% decline in the broader Topix index. The shares had previously closed at 3,182 yen on December 30, 2024, the final trading day of the year.

In a joint statement, Nippon Steel and U.S. Steel called Biden's decision "unlawful" and pledged to take all necessary actions to protect their legal rights. Nippon Steel also faces a $565 million break fee if the deal collapses, compelling the company to reconsider its overseas growth strategy.

President Tadashi Imai criticized the U.S. government's review process, stating it was not handled properly and asserting the company's right to a fair review. Filing a lawsuit against the U.S. government is being considered as a potential countermeasure, according to Imai.

The blocked deal disrupts Nippon Steel's ambition to increase its global steel production capacity from 65 million metric tons to 85 million metric tons per year, inching closer to its long-term target of 100 million tons. Without U.S. Steel, the company will need to explore alternative strategies for achieving this goal.

Nippon Steel plans to hold a press conference to address the U.S. decision, though the exact date remains uncertain. Japanese media reports suggest it may occur on Tuesday. Observers are keenly watching the company's next steps, including any potential legal action or strategic adjustments.