Nippon Steel and US Steel have filed a federal lawsuit challenging the Biden administration’s decision to block a proposed nearly $15 billion deal for Nippon to acquire Pittsburgh-based US Steel.
The suit, filed Monday in the U.S. Court of Appeals for the District of Columbia, alleges that it was a political decision and violated the companies’ due process.
“From the start of the process, both Japanese steel and US Steel have engaged in good faith with all parties to highlight how the transaction will enhance, not threaten, United States national security, including revitalizing communities that depend on American steel, strengthening the supply chain supplying American steel and strengthening the American domestic steel industry. against the Chinese threat,” the companies said in a prepared statement Monday. “Nippon Steel is the only partner willing and able to make the necessary investments. »
Nippon Steel had promised to invest $2.7 billion in US Steel’s aging blast furnace operations in Gary, Indiana, and Mon Valley, Pennsylvania. He also pledged not to reduce U.S. manufacturing capacity over the next decade without first obtaining approval from the U.S. government.
Biden decided Friday to halt the Nippon takeover — after federal regulators deadlocked over its approval — because “a strong, domestically owned and operated steel industry represents a key priority in matters of national security. … Without domestic steel production and domestic steel workers, our nation is less strong and less secure,” he said in a statement.
Although administration officials have said the decision has nothing to do with Japan’s relationship with the United States, it is the first time a U.S. president has blocked a merger between a U.S. and Japanese company.
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Biden will leave the White House in just a few weeks.
The president’s decision to block the deal comes after the Committee on Foreign Investment in the United States, known as CFIUS, failed to reach consensus on possible national security risks related to the deal last month and sent a much-anticipated report on the merger to Biden. He had 15 days to make a final decision.
In a separate lawsuit filed the same day in the U.S. District Court for the Western District of Pennsylvania, the companies accused steel rival Cleveland-Cliffs Inc. and its CEO, Lourenco Goncalves, in coordination with David McCall, the head of the union American Steelworkers, of “engaging in a coordinated series of anti-competitive and racketeering activities” to block the deal.
In 2023, before US Steel accepted Nippon’s buyout offer, Cleveland-Cliffs offered to buy US Steel for $7 billion. U.S. Steel declined the offer and later accepted an all-cash offer of nearly $15 billion from Nippon Steel, a deal that Biden rejected on Friday.
The companies claim that Goncalves, in collusion with American Steelworkers, maneuvered to prevent any party other than Cleveland-Cliffs from acquiring US Steel and to harm the Pittsburgh manufacturer’s competitive ability.
Neither the Steelworkers nor Cleveland-Cliffs of Ohio immediately responded to requests for comment from The Associated Press.
Nippon and US Steel said in the lawsuit that they submitted three draft national security agreements to CFIUS in the fall to address possible concerns.
The companies said in their lawsuit that CFIUS was instructed not to offer counterproposals or engage in discussions with them. Nippon and US Steel claim the review process was manipulated so that the outcome supported a decision they claim Biden had already made.
The companies said President Biden used “undue influence to advance his political agenda.”
However, Japan will face a new administration that has also pledged to block the deal.
President-elect Donald Trump last month outlined his intention to block the deal and pledged to use tax incentives and tariffs to strengthen the iconic U.S. steelmaker.
Trump promised early in the presidential campaign that he would “instantly” block the deal, and he reiterated that sentiment in a post on his Truth Social platform in early December.
Shares of United States Steel Corp. rose more than 3% before the opening bell Monday.
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