*

US Steel, Nippon Steel ( NISTF ) blast Biden's block of deal

*

Concerns about U.S.-Japanese relations

*

Union says job risk unfounded

Jan 4 (Reuters) - U.S. President Joe Biden blocked

Nippon Steel's ( NISTF ) proposed $14.9 billion purchase of U.S.

Steel citing national security concerns, in a potentially

fatal blow to the deal after a year-long review.

Biden, President-elect Donald Trump and an influential labor

union opposed the effort by Japan's top steelmaker to acquire

the iconic American firm, which would have created the world's

third-largest steelmaker, according to World Steel Association

data.

The path forward is unclear. The companies could sue the

U.S. government, another buyer could swoop in for U.S. Steel, or

Republicans who favor the deal could urge Trump to find a way to

approve it.

Here is what could come next:

THE DEAL ITSELF

The proposed deal has not yet been terminated by the

companies even after Biden blocked the deal.

In a joint statement, Nippon and U.S. Steel called

Biden's decision "unlawful," and Nippon Steel ( NISTF ) may file a lawsuit

against the U.S. government challenging the procedures behind

the decision, Japan's Nikkei business daily reported on

Saturday.

David Burritt, U.S. Steel's chief executive, said on Friday

"we intend to fight President Biden's political corruption."

Some lawyers, such as Nick Wall, M&A partner at Allen &

Overy, have said a legal challenge would be tough.

Nippon Steel ( NISTF ) argued it made numerous concessions, including

offering to move its headquarters to Pittsburgh, to meet the

demands of CFIUS, the Committee on Foreign Investment in the

United States, the panel that decides on whether foreign

purchases of U.S. companies should go forward.

CFIUS was split over a decision and did not make a

recommendation on the deal.

"If they go to court most of the decisions by the

various CFIUS agencies will be made public," said Brett Lambert,

a former senior Pentagon official under Barack Obama, citing the

rare move to forward a split decision to the president.

If the deal does not go through, Nippon Steel ( NISTF ) would have

to pay a $565-million break-up fee.

U.S. STEEL'S FUTURE

Pittsburgh-based U.S. Steel had warned that mills could

close and thousands of jobs would be at risk without the deal.

U.S. Steel's profits have dropped for nine straight quarters

amid a global industry downturn, but it still sports a forward

price-to-earnings ratio of 12.87, more expensive than U.S.

peers, according to LSEG data.

The United Steelworkers union, which opposed the deal,

has called the company's warnings baseless, saying Friday that

it is clear that U.S. Steel's recent financial performance shows

it "can easily remain a strong and resilient company."

Other suitors could emerge. U.S.-based Cleveland-Cliffs ( CLF )

, which previously bid for the company, could come back

with a lower offer. However, its market value is now smaller

than that of U.S. Steel.

"One would suspect that Nucor ( NUE ) and Cleveland

Cliffs ( CLF ) will be in discussions with U.S. Steel, but based on

presidential messages one would think the U.S. government may

come to its aid and invest in its infrastructure," said Jay

Woods, chief global strategist at Freedom Capital Markets.

TRUMP'S POSITION

Trump, who takes office on Jan. 20, has repeatedly vowed to

block the sale, a view he shared with Biden.

"I am totally against the once great and powerful U.S. Steel

being bought by a foreign company, in this case Nippon Steel ( NISTF ) of

Japan," he wrote on his Truth Social platform last month.

"As president, I will block this deal from happening. Buyer

Beware!!!"

Trump's transition team did not comment on Friday. However,

several current and former Republican officeholders on Friday

criticized Biden's decision, saying it would cost investment in

the U.S.

U.S.-JAPANESE RELATIONS

Some analysts warned that blocking the deal could sour

relations between the United States and Japan, which Biden had

worked on improving to counter the threat of China's economic

and military rise.

Japan is the top U.S. investor in the U.S. and its

biggest business lobby has raised concerns about political

pressure on the deal, a view the White House rejected.

"It would have helped us rebuild our competitiveness and

counter China. To do this effectively, we need our friends,

particularly Japan," Wendy Cutler, who served as a senior trade

negotiator under former President Barack Obama, wrote on social

media platform X.

Trump's stance on trade could add to that unease when he

returns to office, as he has already threatened heavy tariffs on

key allies Canada, Mexico and Europe.