United States Steel Corporation (X.US) achieved its biggest gain in one year as Japan's Nippon Steel proposed giving the U.S. government veto power to cut production capacity in order to seek approval for a deal.

According to sources familiar with the matter, Nippon Steel has proposed giving the U.S. government veto power over capacity cuts at United States Steel Corporation (X.US), in what is seen as the company's last effort to win approval for its acquisition of United States Steel Corporation. Sources said the proposal is aimed at addressing concerns raised by the Committee on Foreign Investment in the United States (CFIUS). CFIUS stated last week that Nippon Steel's acquisition of United States Steel Corporation would result in a decrease in production at the company. In response to this news, United States Steel Corporation rose 14% at one point during trading on Tuesday, marking its biggest increase since December 2023. United States Steel Corporation closed up 9.54% on Tuesday at $33.99, still well below Nippon Steel's acquisition offer of $55 per share. CFIUS has been reviewing the proposed acquisition for most of 2024. It is reported that CFIUS has not reached a definitive conclusion on whether Nippon Steel's acquisition of United States Steel Corporation poses a threat to U.S. national security. Last Monday, CFIUS submitted the decision on whether to approve the deal to U.S. President Biden, who will have 15 days to make a decision. Biden has long been opposed to the deal, stating that United States Steel Corporation should remain domestically owned and operated. White House spokesperson Saloni Sharma said, "From the outset, the President's position has been that maintaining United States Steel Corporation domestically owned and operated is crucial." "CFIUS's review process has been ongoing." Event Recap In December 2023, the world's fourth-largest steel manufacturer, Nippon Steel, announced its plans to acquire United States Steel Corporation for $14.9 billion in an all-cash deal at $55 per share. The financially strong Nippon Steel hoped to expand its footprint in the U.S., strengthen its position as a global giant, and use overseas expansion to counter weak domestic demand. This acquisition was also expected to increase the company's global crude steel capacity to 100 million tons. However, since the announcement, the acquisition plan has faced repeated setbacks, with opposition from the Biden administration, the United Steelworkers union (USW), and the incoming Trump administration. They have generally objected to foreign ownership of United States Steel Corporation, as the steel produced by the company is a vital commodity used in building ships, trains, and infrastructure. The union also feared that the deal would lead to job losses. Nippon Steel argued that the deal would benefit the U.S. economy and employment, and align with policies to compete with other steel manufacturers. The company had previously stated that it would invest billions of dollars in United States Steel Corporation to "maintain and possibly increase domestic steel production capacity." Nippon Steel also reiterated that it would not transfer any production capacity or jobs from United States Steel Corporation overseas, nor would it interfere with the company's decisions on trade issues, including taking trade measures against unfair trade practices under U.S. law. Despite political pressure surrounding the deal, Nippon Steel has been working to garner support for months. Earlier in November, Nippon Steel said it still expected to complete the acquisition of United States Steel Corporation by the end of the year. The latest news indicates that Nippon Steel announced a plan on Tuesday to provide a $5,000 bonus to each United States Steel Corporation employee if the acquisition is completed. United States Steel Corporation stated that this deal represents a lifeline. The company warned that if the deal fails, it may move its headquarters out of Pennsylvania and close some operations.