(Reuters) -U.S. President Joe Biden plans to formally block Nippon Steel’s proposed takeover of US Steel on national security grounds once the $15 billion deal is referred back to him later this month, Bloomberg News reported on Tuesday, below referral to people familiar with the matter.
The US national security panel reviewing the deal must submit its decision on the merger to Biden by December 22 or 23, Bloomberg reported. Any reference to the president suggests that at least one panelist views the deal as risky, it added.
Asked for comment on the report, the White House said Tuesday there was no update on the deal between the two companies. The Committee on Foreign Investment on the US panel declined to comment.
The two companies are ready to litigate the process if Biden decides to block the merger, Bloomberg reported.
Shares of US Steel fell as much as 21.8% to a two-month low of $30.55 after the Bloomberg report. This caused multiple trading halts due to stock price volatility, eventually falling 10.4% to $34.98.
The takeover has faced opposition within the US since it was announced last year, with both Biden and his new successor Donald Trump both publicly stating their intention to block the takeover.
CFIUS told the two companies in September that the deal would pose national security risks because it could damage the supply of steel needed for crucial transportation, construction and agricultural projects.
Despite opposition, including from the United Steelworkers Union, Japan’s Nippon has pressed ahead with its pursuit of a deal, pledging not to move any U.S. steelmaking capacity or jobs outside the U.S. if the merger is successful.
Nippon has also said it will not interfere with US Steel’s decisions on trade matters, including decisions to take trade remedies against unfair trade practices under US law.
In an effort to win employee support, Nippon Steel said Tuesday it planned to give employees $5,000 each if the deal with US Steel closes. It also promised closing bonuses of 3,000 euros to European workers in Europe, which would result in a total payment of almost $100 million to employees.
(Reporting by Jasper Ward and David Shepardson; Editing by Rami Ayyub and Alistair Bell)
