US Steel, Nippon move court against Biden blocking $14.9 billion deal

Second lawsuit is against Cleveland-Cliffs, its CEO Lourenco Goncalves, and USW union President David McCall "for their illegal and coordinated actions" aimed at preventing the deal

US Steel and Nippon Steel have filed a lawsuit against US President Joe Biden's order that blocked the $14.9 billion buyout of the American steelmaker by the Japanese company, they said on Monday. 

The lawsuit asked the court to set aside the review process of the Committee on Foreign Investment in the US and Biden's order, citing "violation of the Constitutional guarantee of due process and statutory procedural requirements, as well as unlawful political influence". 

The case was filed in US Court of Appeals for the District of Columbia Circuit. 

 

The companies also filed a second lawsuit against Cleveland-Cliffs, its CEO Lourenco Goncalves, and USW union President David McCall "for their illegal and coordinated actions" aimed at preventing the deal. 

Last week, Biden blocked the proposed purchase on national security concerns, dealing a potentially fatal blow to the contentious plan after a year of review. 

Nippon Steel paid a hefty premium to clinch the deal in December 2023 in an auction, topping rivals including Cleveland-Cliffs, ArcelorMittal and Nucor , in a bet on Biden's infrastructure spending bill. 

Political and union resistance to the deal had amplified in recent months. Biden and President-elect Donald Trump, who is set to take office later this month, had opposed the deal. 

The White House had urged for a scrutiny of the agreement, given US Steel's core role in producing a material that is critical to national security. 

The Biden administration told Nippon Steel in a letter the deal would pose a national security risk by harming the American steel industry, Reuters reported in September, citing sources. 

The CFIUS, which was reviewing the deal, failed to reach a consensus, setting the stage for Biden to block the merger. 

US Steel had warned that a failure to conclude a deal would put thousands of US union jobs at risk and had also signaled it would close some steel mills. 

It also said it could potentially move its headquarters out of the politically important state of Pennsylvania. 

Despite the opposition, US Steel shareholders overwhelmingly voted in April last year to approve the acquisition. 

The two companies have also worked to address concerns over the combination. Nippon offered to move its US headquarters to Pittsburgh, where US Steel is based and promised to honor all agreements in place between US Steel and the powerful United Steelworkers union. 

However, the opposition has proved to be an overhang on the stock. Shares of US Steel failed to hit the offer price of $55 per share, signaling investor worries over the timeline of the deal's completion. 

US Steel, founded in 1901 by some of the biggest US magnates, including Andrew Carnegie, J.P. Morgan and Charles Schwab, became intertwined with the industrial recovery following the Great Depression and World War Two. 

The company has been under pressure following several quarters of falling revenue and profit, making it an attractive takeover target for rivals looking to expand their US market share.

   

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)