This post was originally published on this site
https://i-invdn-com.investing.com/trkd-images/LYNXMPEJBJ0M1_L.jpg
WASHINGTON (Reuters) – Brian Deese, a key player in President Joe Biden’s 2024 re-election bid, said on Wednesday that Nippon Steel’s proposed purchase of U.S. Steel was concerning and that the administration should look closely at it.
Several Democratic and Republican U.S. senators have criticized the deal this week, citing national security concerns or raising questions about why the two companies did not consult U.S. Steel’s main union ahead of the announcement.
Deese ran the White House’s National Economic Council for the first two years of Biden’s presidency and helped set the administration’s economic priorities.
“It is concerning and the announcement raises a set of issues that the administration should and likely will look closely at,” Deese said during a call hosted by Biden’s re-election campaign. “The particulars of this announcement do raise real, legitimate concerns that do need to be looked closely at.”
Nippon said on Monday it would buy Pittsburgh-based U.S. Steel for $14.9 billion in cash, prevailing over rivals such as Cleveland-Cliffs (NYSE:CLF), ArcelorMittal (NYSE:MT) and Nucor (NYSE:NUE) in an auction for the 122-year-old steelmaker.
The White House has been tight-lipped about the deal, saying only that there could be a regulatory review, in a reference to a likely review by the Committee on Foreign Investment in the United States (CFIUS) and possibly antitrust authorities.
Democratic Senator Sherrod Brown, who chairs the Senate Banking Committee, on Wednesday urged Biden in a letter to explore “all options” to scrutinize the Nippon-U.S. Steel deal.
Brown said the Democratic president should require “an evaluation of potentially applicable antitrust authorities and a CFIUS review to assess any national security risks” and if the deal “is in the best interest of U.S. workers, consumers, and national security.”
LIKELY REVIEW
Three U.S. Republican senators on Tuesday urged Treasury Secretary Janet Yellen to block the deal, citing national security concerns. Yellen chairs CFIUS, a closed-door panel that scrutinizes deals for potential national security risks.
Philip Bell, the president of the Steel Manufacturers Association, said Japan is a trusted U.S. ally and the deal does not appear to consolidate control of iron ore mining or automotive steel production under a single company, as Cliffs’ proposed purchase earlier this year of U.S. Steel would have done.
U.S. Steel itself is not a member of the trade group, but its Big River Steel subsidiary is.
U.S. Steel said in securities filings that the deal is subject to CFIUS approval and “certain other foreign regulatory approvals.”
“There will likely be a (CFIUS) review, but they will probably not block it,” said Sarah Bauerle Danzman, who teaches international studies at Indiana University. She said CFIUS could only block the deal if it found “a clear national security threat.”
She said transactions involving a Japanese investor happen frequently, with some 60 Japanese transactions reviewed between 2020 and 2022, according to the recent CFIUS annual report.
A similar political outcry arose over a deal involving U.S. assets and a foreign buyer in 2006 when Dubai Ports World took over the global assets of Britain-based P&O – including ports in New York and New Jersey.
While CFIUS approved that deal, Dubai Ports came under tremendous political pressure from U.S. lawmakers and later relinquished the port operations it had purchased to American International Group Inc (NYSE:AIG).
