Nippon-US Steel deal deserves ‘serious scrutiny’, White House says Reuters

© Reuters. FILE PHOTO: The logo of Nippon Steel Corporation is displayed at the company’s headquarters in Tokyo, Japan in this photo taken by Kyodo May 1, 2019. Mandatory credit Kyodo/via REUTERS

Author: Andrea Shalal

WASHINGTON (Reuters) – The White House said on Thursday that Nippon Steel Corp’s proposed $14.9 billion acquisition of U.S. Steel Corp deserves “serious scrutiny” given the company’s key role in domestic steel production that is critical to national security.

In its first substantive public statement on the deal, the White House made clear it supports a close review of the deal by the Committee on Foreign Investment in the United States (CFIUS) and possibly by antitrust authorities.

National Economic Council Director Lael Brainard said President Joe Biden welcomes manufacturers from around the world investing in U.S. jobs and workers.

“However, he also believes that the purchase of this iconic American-owned company by a foreign entity – even one from a close ally – deserves serious scrutiny for its potential impact on national security and supply chain reliability,” she said in a statement issued late Thursday .

“It looks like the type of transaction that Congress authorized the Interagency Committee on Foreign Investment and empowered the Biden administration is ready to scrutinize,” she said. “This administration will be prepared to carefully review the results of any such investigation and take action as necessary.”

The White House’s strongly worded statement comes amid growing criticism of the proposed deal from both Democratic and Republican lawmakers and the powerful US Steelworkers union, which represents workers at America’s third-largest steel company.

Four Democratic and three Republican senators criticized the deal this week, citing national security concerns or raising questions about why the two companies did not consult with US Steel’s main union before the announcement.

Nippon said Monday it will buy Pittsburgh-based US Steel for $14.9 billion in cash, beating out rivals such as Cleveland-Cliffs (NYSE: ), ArcelorMittal (NYSE: ) and Nucor (NYSE: ) at auction for 122-year-old steelmaker.

Brainard said Biden viewed US Steel as an integral part of America’s “arsenal of democracy” during World War II and believed it remained “a major component of total domestic steel production that is critical to our national security.”

Biden has made the restoration of American manufacturing a central pillar of his presidency, often touting the creation of 800,000 manufacturing jobs during his tenure.

Brainard said Biden has also taken steps to protect U.S. steel companies from unfair and market-distorting trade practices in China and other countries, while promoting union jobs throughout the economy.

“That’s why his administration is committed to doing everything in its power to ensure that steelmakers can compete on a level playing field through policies that combat unfair trade practices and recognize that a strong domestic U.S. steel industry is vital to our economy and national security,” she said in a statement.