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Getty Images Final acts Having a 123-year-old iconic American steel giant be taken over by a Japanese producer has not gone well in the US of A. Multiple reports suggest that President Biden today will block Nippon Steel's ( OTCPK:NPSCY ) $14.9B deal for U.
S. Steel (NYSE: X ) after interagency committee CFIUS left the decision in his hands. Nippon Steel will have to fork over a $565M penalty payment to U.
S. Steel should the deal collapse, in a move that will have reverberations for M&A even among the closest U.S.
allies for the foreseeable future. Premarket movement: U.S.
Steel ( X ) is down 8% to $30/share (well below the $55/share buyout price agreed to by Nippon). Backdrop: Deep-pocketed Nippon hoped the acquisition would expand its global footprint at a time when many Japanese firms are looking for international growth as their country deals with a shrinking population crisis. Recall that the steel industry has been in focus following the approval of the Infrastructure Investment and Jobs Act , which is expected to boost U.
S. steel demand for investment in bridges, railways and other projects due to "Buy American" provisions in the legislation. Nippon had estimated that the only major speed bump would be union support, while investment concessions would yield the necessary political leverage.
That didn't happen. A number of Senators initially voiced opposition, like Pennsylvania's John Fetterman, who represents one of the most important states involved in the American steel industry. "It's absolutely outrageous," he declared.
"Steel is always about security - both our national security and the economic security of our steel communities. I am committed to doing anything I can do, using my platform and my position, to block this foreign." Bipartisan support against the takeover later picked up, and one of the final nails in the coffin happened during the election cycle, when both Biden and Trump battled for the blue-collar vote.
What's next? Prior to the agreement from Nippon, there was a bidding war that saw U.S. Steel reject an unsolicited $7.
3B cash-and-stock bid from rival Cleveland-Cliffs ( CLF ). That deal was less than half of what Nippon would pay for the company only four months later. U.
S. Steel would go on to announce a strategic review process and invited several more offers, including one that was reportedly made by U.S.
-based Nucor ( NUE ), which might serve as a basis in the future should a buyer step in to pick up U.S. Steel at a reduced price.
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Today's Markets In Asia, Japan closed. Hong Kong +0.7% .
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