TOKYO (Reuters) – Shares in Nippon Steel fell more than 1% on Monday after U.S. President Joe Biden blocked its proposed $14.9 billion acquisition of US Steel, dampening growth prospects for Japan’s biggest steelmaker.
Biden cited national security concerns, a potentially fatal blow to the deal after a year-long review.
The decline in Nippon Steel’s share price was limited as Biden’s opposition was well expressed and as a result US Steel’s stock was trading well below the offer price.
Nippon Steel shares fell 1% to 3,151 yen in early trade on Monday, compared with a 0.3% drop in the broader index. They closed at 3,182 yen on Dec. 30, the last day of 2024 trading on the Tokyo Stock Exchange, which was closed until late last week for the New Year holiday.
The companies have not yet scrapped the proposed deal even after Biden blocked the purchase.
In a joint statement, Nippon Steel and US Steel called Biden’s decision “illegal” and said they had no choice but to take all appropriate measures to protect their legal rights.
Nippon Steel will owe US Steel a $565 million termination fee if it is not completed, and the Japanese steelmaker will have to overhaul its overseas-focused growth strategy.
With US Steel, Nippon Steel intended to increase its global steel production capacity to 85 million metric tons per year from the current 65 million tons, moving closer to its long-term goal of raising production capacity to 100 million tons.
Nippon Steel may file a lawsuit against the US government challenging the procedures behind the decision, a business daily reported on Saturday.
Nippon Steel Chairman Tadashi Imai said filing a lawsuit against the US government is one of the “important options”, Nippon Television reported on Monday.
Imai told reporters that the U.S. government’s review process and decisions on its acquisition proposal do not appear to have been properly handled, adding that Nippon Steel “is entitled to an appropriate review,” according to the report.
Imai said it would not take long for the company to announce countermeasures to the US government’s decision, the report said.
A spokesman for Nippon Steel confirmed that it plans to hold a press conference to discuss the US government’s decision, although a date has not been set. Kyodo news agency reported that the press conference will be held on Tuesday.
