TOKYO (Reuters) – The Committee on Foreign Investment in the United States (CFIUS) has told the White House it is unable to reach a consensus on national security risks involved in Nippon Steel’s bid for U.S. Steel, the Washington Post reported on Monday.
The decision now lies with President Joe Biden who has 15 days to act. Both Biden and President-elect Donald Trump have said they oppose the $15 billion deal which Nippon Steel announced last December.
Nippon Steel said on Tuesday it did not receive any updates from CFIUS. U.S. Steel did not immediately reply to request for a comment. Both companies have previously planned to close the deal before the year-end.
CFIUS said on Monday that allowing Nippon Steel to take over U.S. Steel could result in lower domestic steel production representing “a national security risk”, according to the Washington Post.
Nippon Steel said it could eliminate that risk by appointing U.S. citizens to top management and board of director positions at U.S. Steel, but the committee was divided in its view of whether those remedies would be sufficient, said the newspaper.
The U.S. Treasury Department, which leads CFIUS, the Commerce Department and White House did not immediately respond to requests for comment.
Nippon Steel faces a $565 million penalty to U.S. Steel if the deal collapses, which would also be a major blow to the Japanese steelmaker’s overseas expansion. It has earlier said it could pursue legal action against the U.S. government if the deal falls apart.
With U.S. Steel, Nippon Steel aimed to raise its global steel production capacity to 85 million metric tons per year from 65 million tons now and the asset is core to its goal of lifting production capacity to more than 100 million tons in the long-term.
With Japan being the largest foreign investor to the US, Japanese Prime Minister Shigeru Ishiba last month sent a letter to Biden asking him to approve Nippon Steel’s acquisition of U.S. Steel.