By Callum Keown and Al Root

In one of his final significant acts as President, Joe Biden is set to block the $14 billion takeover of U.S. Steel by Japan's Nippon Steel.

U.S. Steel and Nippon didn't immediately return requests for comment.

The stock tumbled 8% to $30.02 ahead of the open on multiple reports that Biden could block the deal as early as Friday. S&P 500 and Dow Jones Industrial Average futures were up 0.2% and 0.1%, respectively.

It's a big move, but the deal has been on life support for months.

Biden first made his position clear in March, stating that he opposed the deal and that "it is vital for [U.S. Steel] to remain an American steel company that is domestically owned and operated."

The steel mills, of course, don't go anywhere. And American workers still operate them. What's more, Japan is an ally and Nippon Steel has committed to spending billions to improve operations. Billions that U.S. Steel doesn't have. (Nippon Steel is the fourth largest steel maker in the world. U.S. Steel ranks in the mid-20s.)

Biden isn't alone in his view of the deal, however. Politicians on both sides of the aisle have opposed the merger. President-elect Donald Trump said he would block the deal too, saying it would be "psychologically" difficult for the industry.

While a deal was looking increasingly unlikely for months, U.S. Steel shares surged close to 10% on the final trading day of 2024 after a report that Nippon Steel made a last-ditch proposal to sway Biden to approve the deal before his term ended. The company offered the U.S. government power to veto any reduction in U.S. Steel's production capacity following the takeover, The Washington Post reported.

The failure of the merger is likely to have consequences. CEO Dave Burritt said U.S. Steel would have to close steel mills if the deal collapsed, noting that Nippon's planned investment of close to $3 billion was vital to keeping them competitive and maintaining jobs.

Politicians might be betting that another, American merger partner will emerge for U.S. Steel. Cleveland-Cliffs started the merger drama by bidding about $35 in cash and stock for U.S. Steel in the Summer. Nippon's $55 all-cash offer topped that mark in December.

That's a risky bet to make.

Write to Callum Keown at callum.keown@dowjones.com

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January 03, 2025 07:17 ET (12:17 GMT)

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