Nippon Steel Bid to Buy US Steel Gets Extended Antitrust Review

(Bloomberg) -- The US Justice Department has opened an extended antitrust investigation into Nippon Steel’s $14.1 billion takeover bid for United States Steel Corp., creating additional legal hurdles to completing the deal, according to three people familiar with the situation.

Department regulators are seeking more information on antitrust grounds, according to the people, who asked not to be identified discussing details of a confidential review. The move signals further delays for a deal the companies had hoped would be approved in the second or third quarter and now may not get resolved until after the US presidential election in November.

The extended antitrust investigation, which was reported earlier by Politico, comes as President Joe Biden meets in Washington this week with Japanese Prime Minister Fumio Kishida. Biden has said he wants US Steel to remain domestically owned, but has stopped short of an explicit pledge to kill the deal. Donald Trump, Biden’s main challenger in this year’s election, has said he would try to block it.

The DOJ’s investigation is focusing on Nippon Steel’s ownership in a Calvert, Alabama, steel mill that is a joint venture with ArcelorMittal, the world’s second-largest steelmaker, a person familiar with the probe said. 

The Calvert mill re-rolls raw steel into so-called flat-roll steel that goes into everything from pipes and tubes used in the oil industry to products for autos and the construction business. Calvert doesn’t produce raw steel, so it has to import or purchase steel slabs from other companies like US Steel to make its products. 

If Nippon Steel completes the purchase, the Japanese company would control about 20 million tons of US-based capacity. The DOJ would likely examine any other assets Nippon Steel currently owns to ensure there wouldn’t be anticompetitive practices.

Nippon Steel declined to comment. US Steel wasn’t immediately available for comment. 

The takeover also is being reviewed by the Committee on Foreign Investment in the United States, which examines potential national security concerns with purchases of US businesses by overseas buyers, people familiar with the situation said. That review is expected to take several months, with a decision later this year or early next year. 

It’s not clear if the committee can block a deal from an allied country, since the panel usually looks at transactions involving adversary nations. The committee never confirms or denies its investigations.