Order Regarding the Proposed Acquisition of United States Steel Corporation by Nippon Steel Corporation
On January 3, 2025, President Joe Biden took a significant step in safeguarding U.S. national security by issuing an executive order blocking the proposed acquisition of United States Steel Corporation (U.S. Steel) by Japan-based Nippon Steel Corporation. The decision was made after the President reviewed evidence and concluded that the acquisition posed a credible threat to national security. This action stems from the authority granted under the Defense Production Act of 1950, which allows the President to intervene in foreign transactions that might compromise U.S. interests.
Findings and Grounds for Action
In his order, President Biden made explicit findings that led to the prohibition of the acquisition. According to the order, credible evidence suggested that Nippon Steel Corporation, its U.S. subsidiary Nippon Steel North America, and a third entity, 2023 Merger Subsidiary, Inc., were involved in a deal with the potential to impair U.S. national security. While the specifics of the evidence are not publicly detailed, the President’s statement emphasizes that the transaction could have far-reaching consequences for sensitive industries and sectors within the United States.
Further, the order highlighted that existing legal frameworks, beyond the provisions of the Defense Production Act and the International Emergency Economic Powers Act, would not suffice to adequately address the security concerns related to this acquisition. This acknowledgment points to the extraordinary nature of the action taken, with President Biden using his executive authority to prevent what he deemed a direct and substantial threat to national security.
Prohibition of the Proposed Acquisition
The core of the executive order is the clear prohibition on the proposed acquisition. Specifically, it prevents Nippon Steel Corporation and its affiliates, including Nippon Steel NA and 2023 Merger Subsidiary, Inc., from acquiring United States Steel Corporation. This prohibition extends not only to the direct acquisition of U.S. Steel but also to any indirect transaction that may involve foreign entities or partners, as well as any similar future transactions that could circumvent the order.
The prohibition is designed to be broad and all-encompassing, ensuring that no element of the proposed transaction can be restructured or revived under different terms. This is particularly important as the parties involved have significant foreign ownership structures, and the U.S. government aims to prevent any indirect or roundabout efforts to push the deal forward.
Mandatory Abandonment of the Deal
One of the most critical elements of the order is the directive requiring the abandonment of the proposed acquisition. The order gives Nippon Steel and U.S. Steel a 30-day window from the issuance date to fully and permanently abandon the transaction. This period is meant to provide the involved parties with time to unwind their agreements, cancel contracts, and reverse any steps they have taken toward finalizing the acquisition.
However, the order allows the Committee on Foreign Investment in the United States, which is responsible for reviewing foreign transactions affecting U.S. national security, to extend the 30-day deadline if necessary. CFIUS is also tasked with overseeing the process to ensure that all aspects of the acquisition are fully abandoned in compliance with the order.
To ensure transparency and accountability, the order mandates that both parties, the Purchasers (Nippon Steel and its affiliates) and U.S. Steel, must provide weekly reports to CFIUS on their progress toward abandoning the deal. These reports must include a detailed description of all steps taken to abandon the transaction and a projected timeline for completion. Additionally, the parties are required to certify in writing to CFIUS once the abandonment is complete.
Prohibition of Evasion and Circumvention
The order also takes a firm stance against any attempt to circumvent its directives. It specifically prohibits any actions, transactions, or agreements designed to bypass or evade the prohibition. This measure ensures that even if the parties try to alter the structure of the deal or use alternative methods to complete the transaction, such actions will be met with legal consequences.
The President’s order provides broad enforcement authority, not just to CFIUS, but also to other agencies and departments that may be involved in monitoring or investigating potential violations of the order. CFIUS is authorized to take additional steps to safeguard U.S. national security, including the imposition of further sanctions or restrictions if deemed necessary.
Enforcement and Additional Powers
The executive order empowers the Attorney General to take all necessary actions to enforce the provisions of the order. This includes pursuing legal remedies if any party fails to comply with the order or attempts to violate its terms. In addition, the President reserves the right to issue further orders if additional steps are needed to protect national security, reflecting the flexibility of the executive order and its adaptability to future developments.
This authorization is particularly important as it signals the administration’s willingness to take swift and decisive action should any party involved in the deal attempt to challenge or subvert the order.
Publication and Notification
In accordance with standard procedure, the President’s order will be published in the Federal Register, ensuring that the decision is formally documented and accessible to the public. The Secretary of the Treasury is also tasked with transmitting a copy of the order to the parties involved in the transaction, ensuring that all stakeholders are made aware of the legal prohibitions and compliance requirements.
The Broader Implications of the Decision
This executive order marks a significant moment in U.S. corporate law and foreign investment policy. It underscores the importance the current administration places on national security when it comes to foreign acquisitions of American companies, particularly those with strategic significance. By blocking this particular deal, President Biden’s administration has sent a strong message that the U.S. government will not hesitate to intervene in corporate transactions that may pose risks to the nation’s security, industrial base, or technological infrastructure.
The decision is also a reflection of the growing concerns regarding foreign influence in critical U.S. industries, especially in sectors tied to national defense, advanced manufacturing, and economic stability. With China and other foreign powers increasingly vying for influence in the global economy, the Biden administration has signaled that it will continue to closely monitor foreign investments that could affect U.S. economic interests.
This order will likely set a precedent for future foreign acquisition reviews, especially in industries with implications for national security. The U.S. government’s ability to block such transactions emphasizes the legal and regulatory mechanisms at its disposal to protect the nation's vital interests.
