Nippon Steel and US Steel have filed a federal lawsuit challenging the US government’s decision to block Nippon’s nearly $15 billion proposed acquisition of Pittsburgh-based US Steel.
The lawsuit, filed Monday in the U.S. Court of Appeals for the District of Columbia, alleges it was a political decision and violated the companies’ due process.
“From the beginning of the process, both Nippon Steel and US Steel have engaged in good faith with all parties to underscore how the transaction will enhance, not threaten, the national security of the United States, including by revitalizing communities that depend on North American steel, strengthening steel supply chain and strengthening the domestic steel industry against the threat from China,” the companies said in a prepared statement on Monday. “Nippon Steel is the only partner both willing and able to make the necessary investments.”
Nippon Steel had promised to invest $2.7 billion in US Steel’s blast furnace operations in Gary, Indiana, and Pennsylvania’s Mon Valley. He also pledged not to reduce production capacity in the United States over the next decade without first obtaining government approval.
President Joe Biden decided Friday to halt the Nippon acquisition — after federal regulators failed to reach an agreement on whether to approve it — because “a strong, domestically owned and operated steel industry represents an essential national security priority. … Without domestic steel production and domestic steel workers, our nation is less strong and less secure,” he said in a statement.
While administration officials have said the decision was unrelated to Japan’s relationship with the United States — this is the first time a U.S. president has blocked a merger between an American and Japanese firm.
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, known as CFIUS, failed to reach a consensus on the deal’s potential national security risks last month, and sent a report on the merger to Biden. . He had 15 days to make a final decision.
In a separate lawsuit filed in the Court for the Western District of Pennsylvania on the same day, the companies accused steel rival Cleveland-Cliffs Inc. and its CEO, Lourenco Goncalves, in coordination with David McCall, the head of the steelworkers union. of the United States, of “engaging in a coordinated series of anti-competitive and organized crime activities” to block the agreement.
In 2023, before US Steel accepted Nippon’s purchase offer, Cleveland-Cliffs offered to buy US Steel for $7 billion. US Steel rejected the offer and later accepted a cash offer of nearly $15 billion from Nippon Steel, which is the deal Biden voided on Friday.
The companies allege that Goncalves, in collusion with U.S. steelworkers, maneuvered to prevent any party except Cleveland-Cliffs from acquiring U.S. Steel and to harm the Pittsburgh manufacturer’s ability to compete.
Nippon and US Steel said in the lawsuit that they submitted three draft national security agreements to the Committee on Foreign Investment, a body that investigates proposed foreign investments in the United States for potential national security risks, to address any concerns.
The companies said in their lawsuit that CFIUS was told not to offer counterproposals or hold discussions with them. Nippon and US Steel argue that the review process was manipulated so that the result supported a decision they say Biden had already made.
The companies said President Biden used “undue influence to advance his political agenda.”
Nippon, however, will face an incoming administration that has also vowed to block the deal.
President-elect Donald Trump last month stressed his intention to block the agreement and promised to use tax incentives and tariffs to strengthen the iconic American steelmaker.
Trump had promised early in the presidential campaign that he would block the deal “instantly,” and he reiterated that sentiment in a post on his Truth Social platform in early December.
Connect with the Voice of America! Subscribe to our channels YouTube, WhatsApp and to newsletter. Turn on notifications and follow us on Facebook, x and instagram.
Add Comment