In a significant decision regarding national security, President Biden has issued an order prohibiting the proposed acquisition of United States Steel Corporation (U.S. Steel) by Nippon Steel Corporation and its affiliates.
The acquisition, which was under review by the Committee on Foreign Investment in the United States (CFIUS), was initially brought to the committee’s attention on March 14, 2024.
Nippon Steel Corporation, based in Japan, along with Nippon Steel North America, Inc., and 2023 Merger Subsidiary, Inc., submitted a voluntary notice regarding the transaction.
Following a thorough investigation, CFIUS submitted its recommendation to the President on December 23, 2024, highlighting potential national security risks associated with the acquisition.
In response, President Biden issued the January 3 Order on January 3, 2025, prohibiting the Proposed Transaction based on substantial evidence indicating that such an acquisition could compromise U.S. national security.
This order cited the President’s authority under section 721 of the Defense Production Act of 1950, which allows for the suspension or prohibition of transactions posing threats to national security.
Subsequently, on April 7, 2025, President Biden directed CFIUS to initiate a de novo review of the Proposed Transaction.
The memo requested an updated assessment of the national security risks and any proposed mitigation measures that could adequately address the concerns raised.
CFIUS submitted its updated recommendation on May 21, 2025, which included the agency’s collective views on the risks of the acquisition and on potential alleviating measures.
In the May 21 recommendation, CFIUS reaffirmed previous findings that credible evidence exists suggesting that the Purchasers might undertake actions threatening U.S. national security.
In the newly issued order, President Biden acknowledged these findings while indicating that appropriate measures could mitigate the national security risks.
Thus, the order revises the January 3 Order by allowing for conditions under which the acquisition could proceed.
The amendment to the initial prohibition stipulates that the Purchasers must enter into a National Security Agreement (NSA) with the U.S. Department of the Treasury and other relevant agencies by the closing date of the transaction.
The agreement must be materially consistent with a draft NSA that was provided by the U.S. Government to the Purchasers and U.S. Steel on June 13, 2025.
This flexibility demonstrates an effort to address national security concerns while potentially allowing for the acquisition if the specified conditions are met.
Additionally, the President has reserved the right to issue further orders should he deem it necessary to protect U.S. national security.
The updated order reflects the administration’s ongoing scrutiny of foreign investments in critical domestic industries and highlights the delicate balance between fostering foreign investment and safeguarding national interests.
As the discussions between U.S. Steel and Nippon Steel unfold under this new guidance, the implications of such transactions will undoubtedly continue to be a matter of significant interest and concern.
In summary, the resolution of this matter illustrates the complexities involved in international business acquisitions and the critical role that national security considerations play in such decisions.
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