According to the FT, “President Joe Biden will block Nippon Steel’s acquisition of U.S. Steel . . . . on national security grounds.”
The WaPo echoes that reporting and adds that a “White House official declined to comment, but said in a statement that CFIUS had not yet transmitted its recommendation to the president.”
When I wrote in the WSJ in April about the transaction, I noted that “under the law, Mr. Biden can take action to stop the acquisition only if the committee refers the matter to him and he finds ‘credible evidence’ that the transaction ‘threatens to impair national security.’” Given the reporting that the president has prejudged the deal and made a national security decision before the Committee has even made its referral and recommendation to him, it seems the transaction parties have a legitimate violation of due process claim . . .
If the developments are true, it is disappointing on many levels . . . Most importantly, in my view, because of the long-term (and completely unnecessary) damage done to the integrity and credibility of a critically important national security tool, and to the vital geopolitical relationship that the United States has with Japan.
Such an outcome has no credible national security justification, and is simply and transparently, to every outside observer, politically motivated.
And a presidential rejection of this transaction will have profound impacts.
Just yesterday U.S. Steel’s CEO said if the deal didn’t happen, the company would likely close factories and moves it’s headquarters from Pittsburgh and to another state.
As I said in April, if blocked on CFIUS grounds, “global investors would be right to wonder whether America is open for business, while special interests would have gained a new lever of power and lobbyists a new cash cow. American allies would have another reason to worry about how special their relations with the U.S. really are. And the legitimacy of a vital national-security tool would be compromised.”
More to follow. Will be watching this VERY closely.