US Steel Stock Sinks as Biden Reportedly Set to Block Nippon Steel Takeover

Shares of U.S. Steel (X) are sinking 9% in premarket trading Friday on reports that President Joe Biden has decided to block the $14.1 billion sale of the iconic American company to Japan’s Nippon Steel.

The White House is planning to announce the decision on Friday, Bloomberg reported, which said both companies have “signaled that they planned to pursue legal action if Biden formally blocked the deal.”

Bidend’s rejection of the deal will be based on the view that the sale poses a threat to national security, The New York Times reported, and could hurt relations with Japan, a close U.S. ally and a big investor in the country.

U.S. regulators failed to agree on whether to allow the Japanese company’s acquisition to go through last month, passing the decision to President Biden.

US Steel’s Future Seen in Doubt If Biden Nixes Deal

The Japanese firm has pledged to invest more than $2.7 billion in U.S. Steel facilities, and CEO David Burritt has warned of plant closures and the possibility of moving the American company’s headquarters from Pittsburgh if the government blocks the sale.

A rejection of the deal would cast a pall over U.S. Steel’s future. It had previously rejected a takeover offer by Cleveland-Cliffs (CLF), which subsequently bought a Canadian steel firm, Stelco.

Neither U.S. Steel nor Nippon Steel immediately returned an Investopedia request for comment.