The White House is close to announcing President Joe Biden will block Nippon Steel’s (5401.T), opens new tab acquisition of U.S. Steel (X.N), opens new tab citing national security concerns, two sources familiar with the situation said on Wednesday, amid growing bipartisan political opposition to the $14.9 billion deal.
U.S. Steel had earlier warned on Wednesday that a failure to conclude a deal with Japan-based Nippon would put thousands of U.S. union jobs at risk and signaled that it would close some steel mills and potentially move its headquarters out of the politically important state of Pennsylvania.
A decision could be announced as soon as later this week, sources told Reuters. The move could potentially impact the United States’ relationship with Japan, a close ally.
The Washington Post first reported the plan. Shares of U.S. Steel closed down 17.5%. Nippon Steel shares fell 1.6% early on Thursday in Tokyo but later recovered to trade 0.3% up.
Both Nippon Steel and U.S. Steel said they did not receive any updates from the Committee on Foreign Investment in the United States (CFIUS) regarding the deal, adding they did not believe the acquisition posed national security risks.
“Japan is one of our most staunch allies,” U.S. Steel said in a statement. “We fully expect to pursue all possible options under the law to ensure this transaction… closes.”
“Nippon Steel strongly believes that the U.S. government should appropriately handle procedures on this matter in accordance with the law,” the Japanese company said in a separate statement.
Nippon’s planned acquisition of the U.S. steelmaker faces opposition from Democrats and Republicans, with Vice President and Democratic presidential candidate Kamala Harris saying on Monday she wants U.S. Steel to remain “American owned and operated.” Her Republican rival Donald Trump has pledged to block the deal if elected.