Jan. 1 (UPI) — Japan-based Nippon Steel has offered to give the U.S. government veto power over any potential reduction in steel output by U.S. Steel if the federal government approves a proposed merger.
Nippon Steel officials want to buy Pittsburgh-based U.S. Steel for $15 billion, but President Joe Biden has opposed the deal.
President-elect Donald Trump also opposes the proposed merger.
Nippon Steel on Tuesday tendered a new offer that includes the newly proposed veto power in hope of gaining Biden’s approval before he exits the Oval Office in less than three weeks.
Nippon Steel previously only offered to give U.S. Steel’s board of directors the power to veto any changes in production output, The Motley Fool reported.
It also has offered to guarantee no production changes in six U.S. states for at least 10 years if the merger happens.
The federal Committee on Foreign Investment in the United States last week was deadlocked in its review of the propose sale and its potential impact on U.S. national security.
The panel is tasked with reviewing potential deals that could create national security risks and has some members concerned a possible reduction in domestic steel output negatively would affect the U.S. economy, the Pittsburgh Post-Gazette reported.
CFIUS did not okay the deal due to its deadlocked panel on Dec. 23, which gives Biden up to 15 days from that date to approve or deny the transaction.
The Department of Justice also is reviewing the proposed sale to determine if the merger might violate antitrust laws.
The boards of directors at U.S. Steel and Nippon each unanimously approved the sale, but U.S. federal regulators so far have blocked it. Biden has the final say in the matter.
Cleveland, Ohio-based Cleveland Cliffs in August proposed a $7.3 billion merger that U.S. Steel board members declined in favor of the Nippon Steel offer, which they say would improve national security.
“The transaction between U.S. Steel and Nippon Steel enhances U.S. national and economic security through investment in manufacturing and innovation – by a company based in one of the United States’ closest allies – and forges an alliance in steel to combat the competitive threat from China,” U.S. Steel officials said in a Dec. 23 statement.
“This is a transaction that should be approved on its merits and one that should be a model for ‘friendshoring’ investment,” the statement continues. “It is the best way, by far, to ensure that U.S. Steel, including its employees, communities and customers, will thrive well into the future.”
Nippon Steel’s enhanced offer of U.S. governmental veto power helped U.S. Steel shares to close with a 9.54% gain on Tuesday afternoon.
Share prices stayed mostly level until news of the enhanced offer by Nippon Steel caused the shares price for U.S. Steel to rise from $31.12 at 2:20 p.m. EST to a high of $35.08 an hour later.
The shares price closed at $34.04 at the end of trading on Tuesday and was U.S. Steel’s largest one-day gain in 2024.