The Fallout of U.S. Steel
The end of a troubled takeover bid
President Biden is set to officially block Nippon Steel’s $14 billion takeover of U.S. Steel as soon as Friday, most likely putting an end to an industrial megadeal that ran up against widespread political opposition.
But the decision could set off a cascade of consequences, including whether it would dissuade foreign investment in key industries, even from crucial U.S. allies like Japan. There’s one near-certainty: Expect a lot of litigation.
The deal’s demise seemed increasingly inevitable. In March, Biden said it was “vital” that U.S. Steel remained American-owned. The United Steelworkers union opposed the deal from the beginning, questioning Nippon Steel’s commitment to maintaining American company production and unionized employment. The fact that U.S. Steel’s headquarters is in Pennsylvania, an important election battleground, was not lost on anyone. )
Last month, the federal government panel, known as CFIUS, that reviewed the deal on national security grounds expressed concern that the Japanese suitor’s global business considerations could eventually outweigh any commitments it made to preserve U.S. Steel production levels.
President-elect Donald Trump also pledged to block the takeover once he took office.
Others have worried that blocking the deal could chill foreign investment. In recent days, some senior Biden advisers warned that rejecting the transaction could damage relations with Japan, The Washington Post reported.
Japanese officials pressed Biden to approve the deal. Takehiko Matsuo wrote to Biden administration officials that rejecting the deal would send a “sharp message” that Japanese investment, regardless of whether there are security concerns, was not welcome in the U.S. That lays the groundwork for the Japanese company or U.S. Steel to sue over Biden’s expected move.
DealBook also wonders whether the companies would sue each other, perhaps citing a failure to do enough to win approval. The deal agreement stipulates that Nippon Steel must pay $565 million to its American counterpart if regulators reject the transaction. What’s next for U.S. Steel David Burritt, the company’s C.E.O. has warned that investment is needed to upgrade its aging facilities. Even CFIUS acknowledged that the company had a “history of inadequate attempts to improve its competitiveness.”
One possibility is another bidder — such as Cleveland-Cliffs, which had been previously rebuffed by U.S. Steel and whose stock has been under pressure — could swoop in. Mike Johnson, who has the support of Donald Trump and Elon Musk but is hampered due to a razor-thin margin and a fractious House Republican Conference, faces a nail biting vote on Friday. The outcome of the vote will be closely watched by corporate America to see what it means for the chamber’s ability pass legislation after Trump takes office. The authorities identify the driver of the Las Vegas Cybertruck explosion. The F.B.I. said it had found no link between the incident and the deadly New Orleans rampage hours earlier involving an Army veteran.
China places trade restrictions on dozens of U.S. companies. The Ministry of Commerce announced on Thursday that export-control limits would be put on 28 companies, including Boeing and Lockheed Martin. The move comes weeks before Trump’s inauguration and will likely escalate a trade conflict between Washington and Beijing. Biden administration is considering a ban on Chinese drones.
At another car company, Tesla’s sales numbers announced on Thursday would have been a disaster. The Times’s Jack Ewing writes in DealBook that the reaction on Wall Street has been relatively muted compared to the massive rally in Tesla’s shares in recent months. The Times’ Jack Ewing writes for DealBook that this reflects the extent to which Elon Musk has convinced investors that the cars are part of a larger vision that includes self driving taxis and humanoid robotics, and his close relationship with President-elect Donald Trump.
Musk’s relationship with Trump has given him a direct line to the White House that he can use to promote his business interests.
“Investors have shifted,” Erik Gordon, a professor at the Ross School of Business at the University of Michigan, told DealBook. “They thought of this as an E.V. company. Now they see it as a platform for technology. Musk has not revealed much about his plans. During conference calls with investors and analysts, he has focused on what he says will be trillions of dollars in revenue from self-driving taxis that are probably years away from mass production.
Yet Musk may find it difficult to realize his grand visions if the company keeps losing market share to rivals such as General Motors, BMW and BYD. (The Chinese car manufacturer reported record sales in the year 2024. )Does Musk need to accelerate plans for a lower-cost Tesla?
He told investors in October that the company would begin selling a car this year that would cost substantially less than a Model 3 sedan, which starts at $42,500 before state and federal incentives.But Musk has sounded ambivalent about the new vehicle, calling it “pointless” unless it’s capable of driving autonomously. Tesla hasn’t shown a prototype.
This has led to speculations that Musk is no longer interested in mass-market vehicles. Gordon said that “Musk is excited by the technology of tomorrow.” “An econobox E.V. Would he then use more of the skills he used to build Tesla into the world’s largest maker of electric cars? The decision is a victory for cable and telecom companies, such as AT&T, Comcast and others, as it ends a two-decade long effort to regulate them as utilities. The decision is a win for cable and telecom companies such as AT&T and Comcast, ending a two-decade effort to regulate them like utilities. The rules were revoked in the first Trump administration, but reinstated by F.C.C. in April.
Brendan Carr, President-elect Donald Trump’s pick to lead the F.C.C., has been a vocal critic of the rules.
The ruling could inspire other legal challenges. It relies on last year’s Supreme Court decision to overturn the Chevron doctrine, which required courts to defer federal agencies’ interpretations of ambiguous laws. “The F.C.C.,” Judge Richard Allen Griffin wrote, “lacks the statutory authority to impose its desired net-neutrality policies.”
Tim Wu, a former Biden administration official who coined the term “net neutrality,” slammed the decision, calling it “blatant judicial activism that puts corporate interests over American democracy.”What’s next? What’s next? Democrats at the F.C.C. The Times quoted Blair Levin, a former chief of staff to the F.C.C., as saying that “the market no longer thinks it’s a big deal and hasn’t for a while.” Semafor first reported that Joel Kaplan, a longtime Meta staffer and former deputy chief of Staff under former President George W. Bush will take over Nick Clegg. Meta has tried to keep itself out of political spotlight.
Clegg, a former deputy prime minister of Britain, joined the tech giant when the company was facing fierce blowback, including for its handling of disinformation on its platform during the 2016 election.
He’s credited with smoothing relations with regulators, especially in Washington and Brussels.Could his leftish politics have become a liability?
Clegg may have been planning his exit before the election, but he didn’t hide his opinions. Last month, he warned that Elon Musk, whose X and xAI compete with Meta, could become a “political puppet master” and criticized Musk’s stewardship of X.
The remarks came as many businesses worry about retribution from President-elect Donald Trump and Musk — and as Big Tech C.E.O.s have gone out of their way to curry favor with them.Kaplan’s deep Republican roots could help Meta in the new Trump era. He joined Facebook in 2011 and later served as Clegg’s deputy. He was a clerk for Justice Antonin Scalia at the Supreme Court, and is close to Justice Brett Kavanaugh. (He appeared at Kavanaugh’s contentious confirmation hearings, and later apologized to Meta employees who thought his presence showed a political preference).
He has also been one of the loudest voices inside Meta pushing against restrictions on political content.
Mark Zuckerberg has largely turned away from politics. For many years, the tech mogul has publicly supported liberal causes. However, after receiving sustained criticism he has changed his position. Trump criticized Zuckerberg and threatened to put him in jail after accusing Meta of censoring conservative views.
But Zuckerberg, like other Big Tech leaders, has made efforts to court Trump, having traveled to Mar-a-Lago to meet the president-elect after the November election.THE SPEED READ
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