WASHINGTON (AP) — 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, claims it was a political decision and violated the companies’ due process rights.
“From the outset of the process, both Nippon Steel and US Steel have worked in good faith with all parties to underscore how the transaction will enhance and not threaten the national security of the United States, including through communities that rely on American steel and strengthen the U.S. steel supply chain and strengthen the U.S. domestic steel industry against the threat from China,” the companies said in a prepared statement on Monday. “Nippon Steel is the only partner willing and able to make the necessary investments.”
Nippon Steel had pledged to invest $2.7 billion in US Steel’s aging blast furnace operations in Gary, Indiana and Mon Valley, Pennsylvania. It also pledged not to reduce manufacturing capacity in the United States over the next decade without first obtaining U.S. government approval.
Biden decided Friday to halt the Nippon takeover — after federal regulators deadlocked on whether to approve it — because “a strong, domestically managed and operated steel industry represents an essential national security priority. … Without domestic steel production and domestic steelworkers, our nation is less strong and less secure,” he said in a statement.
Although administration officials have said the decision had nothing to do with Japan’s relationship with the U.S., this is the first time a U.S. president has blocked a merger between an American and Japanese company.
Biden will leave 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 last month to reach consensus on the deal’s potential national security risks, and a long-awaited report on sent the merger to the United States. Biden. He had fifteen 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 rival Cleveland-Cliffs Inc. and its CEO, Lourenco Goncalves, in partnership with David McCall, the head of the steel mill. The US Steelworkers Union would “engage 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. US Steel turned down the offer and later accepted an all-cash offer of nearly $15 billion from Nippon Steel, the deal Biden rejected on Friday.
