TOKYO (Reuters) – Nippon Steel shares fell more than 1% on Monday after U.S. President Joe Biden blocked a $14.9 billion bid to acquire U.S. Steel, weakening growth prospects for Japan’s largest steelmaker.
Biden cited national security concerns, which could be a fatal blow to the agreement after a year of renegotiation.
The decline in Nippon Steel’s share price was limited as Biden’s opposition was highly visible, and as a result, US Steel shares traded well below the offer price.
Nippon Steel shares fell 1% to 3,151 yen in early trading Monday, compared with a 0.3% fall in the broader index. They closed at 3,182 yen on Dec. 30, the last trading day of 2024 on the Tokyo Stock Exchange, which was closed until late last week for the New Year holiday.
The proposed deal has still not been canceled by the companies even after Biden blocked the purchase.
In a joint statement, Nippon Steel and US Steel called Biden’s decision “illegal” and said they were left with no choice but to take all necessary measures to protect their legal rights.
Nippon Steel will have to pay US Steel $565 million in compensation if the project is not completed, and the Japanese steelmaker will need to seriously rethink its growth strategy focused on overseas markets.
With the help of US Steel, Nippon Steel aimed 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 increasing production capacity to 100 million tons.
Nippon Steel may file a lawsuit against the US government challenging the procedures behind the decision, a business newspaper reported on Saturday.
Nippon Steel President 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 the acquisition offer did not appear to have been made properly, adding that Nippon Steel “is entitled to due diligence,” according to the report.
Imai said it would not take long for the company to announce countermeasures in response to the US government’s decision, the report said.
A Nippon Steel spokesman confirmed that it plans to hold a press conference to discuss the US government’s decision, although a date has not yet been set. Kyodo news agency said the press conference would be held on Tuesday.