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 lawsuit, filed Monday in the U.S. Court of Appeals for the District of Columbia, alleges the decision was political and violated corporate due process.
“From the beginning of the process, Nippon Steel and US Steel have engaged in good faith with all parties to emphasize how the deal enhances, not threatens, the national security of the United States, including by revitalizing communities that depend on American steel, strengthening and strengthening the interests of the United States,” the companies said in a prepared statement on Monday. : “The US steel supply chain, strengthening the US domestic steel industry against the Chinese threat.” “Nippon Steel is the only partner willing and able to make the necessary investments.”
Nippon Steel has promised to invest $2.7 billion in US Steel’s old blast furnace operations in Gary, Indiana, and Moon Valley, Pennsylvania. It also pledged not to reduce production capacity in the United States during the next decade without first obtaining the approval of the American government.
Biden decided on Friday to halt the Nippon acquisition — after federal regulators deadlocked over its approval — because “a strong, domestically owned and operated steel industry is a core national security priority.” “Without domestic steel production and domestic steelworkers, our nation would be less strong and less secure,” he said in a statement.
While administration officials said the decision had nothing to do with Japan’s relationship with the United States, this is the first time a US president has blocked a merger between an American and Japanese company.
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Biden leaves the White House in 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 the potential national security risks of the deal last month and sent a long-awaited report on the merger to the United States. Biden. He had 15 days to reach a final decision.
In a separate lawsuit filed in the US District Court for the Western District of Pennsylvania on the same day, the companies accused steelmaker rival Cleveland-Cliffs Corporation and its CEO, Lourenco Goncalves, of coordinating with David McCall, the company’s president. United States Steelworkers United States, on charges of “engaging in a coordinated series of anti-competitive and racketeering activities” to block the deal.
In 2023, before US Steel accepted Nippon’s takeover offer, Cleveland-Cliffs offered to buy US Steel for $7 billion. US Steel rejected the offer and later accepted a roughly $15 billion cash offer from Nippon Steel, a deal that Biden rejected on Friday.
The companies allege that Goncalves, in collusion with U.S. Steelworkers, maneuvered to prevent any party other than Cleveland-Cliffs from acquiring U.S. Steel and harming the Pittsburgh manufacturer’s ability to compete.
Neither the Steelworkers nor the Cleveland-Cliffs, Ohio, company immediately responded to The Associated Press’ requests for comment.
Nippon and US Steel said in the lawsuit that they submitted three draft national security agreements to CFIUS in the fall to address any concerns.
The companies said in their lawsuit that CFIUS was told not to submit any counterproposals or have discussions with them. Nippon and US Steel say the review process was manipulated so that the result supported the decision they say Biden already made.
The companies said President Biden used “undue influence to advance his political agenda.”
However, Nippon will face an incoming administration that has also vowed to block the deal.
President-elect Donald Trump last month confirmed his intention to block the deal, vowing to use tax incentives and tariffs to boost the famous US steelmaker.
Trump had pledged early in the presidential campaign that he would block the deal “immediately,” and he repeated 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 on Monday.
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