U.S. Steel sinks on reports that Biden will block Nippon bid

U.S. Steel X stock sank more than 18% Wednesday afternoon after news broke that the Biden Administration was preparing to stop Nippon Steel from purchasing the manufacturing giant.

The Washington Post reported that President Joe Biden will announce his decision to formally block the Japanese company’s $14.9 billion acquisition. Biden has long opposed the deal.

U.S. Steel CEO David Burritt told The Wall Street Journal on Wednesday that the acquisition was necessary for his company to survive. Without the deal, “thousands of good-paying union jobs” would be at risk and the company might have to leave its headquarters in Pittsburgh, he warned.

He also said they couldn’t invest in older mills if the deal fell through. “I don’t have the money,” he told the paper.

Nippon Steel reportedly said it would invest an additional $1.3 billion in U.S. steel, on top of the $1.4 billion it already pledged last week, as part of the deal. The additional funding would go to facilities in Pennsylvania and Indiana.

The potential steel deal is a hot-button issue in the U.S. presidential race, particularly in the key swing state of Pennsylvania. Both candidates have said they want U.S. Steel to remain American-owned, even if the CEO says that isn’t practical and Japan is an ally of the U.S.

The United Steelworkers union is also opposed to the deal, saying it would make Nippon stronger but U.S. Steel weaker. Burritt’s “reckless statements and mismanagement are the only true obstacles to U.S. Steel remaining a sustainable steel company,” the union told the Journal.

A spokesperson for Nippon told CNBC that “U.S. Steel and the entire American steel industry will be on much stronger footing because of Nippon Steel’s investment in U.S. Steel – an investment that Nippon Steel is the only willing and able party to do so.”

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