Nippon Steel plans to pursue legal action after US President Joe Biden blocked its proposed $14.1 billion acquisition of US Steel Corporation, South China Morning Post reported on Saturday (Jan 4).

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President Biden cited concerns over national security as the reason for blocking the deal. “We need major US companies representing the major share of US steelmaking capacity to keep leading the fight on behalf of America’s national interests,” Biden said in an announcement on Friday.

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'No choice but to regard this seriously': Japan’s industry minister

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The decision has drawn sharp criticism from Japan.

Japan’s industry minister Yoji Muto said, “It is incomprehensible and regrettable that the Biden administration has made this kind of decision, citing national security concerns.” He added, “The Japanese government has no choice but to regard this seriously.”

Nippon Steel and US Steel have also condemned the decision, alleging that the review process was manipulated for political purposes.

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“It is shocking and deeply troubling that the US government would treat an ally like Japan in this way,” the companies said in a joint statement.

President Biden justified his decision by pointing to “credible evidence” that Nippon Steel, through the acquisition, “might take action that threatens to impair the national security of the United States.”

The Committee on Foreign Investment in the United States (CFIUS), responsible for assessing foreign acquisitions, had failed to reach a consensus by its December 23 deadline on whether the deal posed a security risk.

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The two companies argued that the president had not provided any substantial evidence to support his claims.

They described the review as “deeply corrupted by politics,” alleging that the outcome had been “pre-determined” to align with Biden’s political agenda.

The companies added, “We believe that President Biden has sacrificed the future of American steelworkers for his own political agenda.”

They said the decision sent “a chilling message to any company based in a US-allied country contemplating significant investment in the United States.”

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As part of the original agreement, Nippon Steel is required to pay a $565 million break-fee if the deal is blocked.

This marks the first time a US president has stopped a merger or acquisition involving a Japanese company.

The deal, initially announced in 2023, has been a source of political controversy, particularly during the run-up to the November US presidential election.

Both President Biden and President-elect Donald Trump have openly opposed the acquisition.

(With inputs from agencies)