Nippon and US Steel file a lawsuit after the Biden administration blocked a $15 billion deal

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, 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 American steel supply chain, strengthening the American 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 move has 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.

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, decided… 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 Biden. He had 15 days to reach a final decision.

In a separate lawsuit filed in the U.S. District Court for the Western District of Pennsylvania, the companies accused rival steelmaker Cleveland-Cliffs Corp. and its CEO Lourenco Goncalves of “engaging in a coordinated series of anticompetitive 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 ended up accepting the nearly $15 billion all-cash offer from Nippon Steel, a deal that Biden rejected on Friday.