Nippon and US Steel sue government over blocked deal
2025-01-06
Category: economic

Nippon Steel and US Steel are suing the US government over blocking a takeover, claiming that President Joe Biden "ignored the rule of law to gain favor" with trade unions. The two companies also alleged that President Biden, who is entering the last weeks of his administration, stopped Nippon Steel buying US Steel to pursue his own political agenda.In rejecting the proposed deal on Friday, President Biden said a strong domestically-owned steel industry was essential for national security and resilient supply chains, including for the car and defence industries.If the $14.9bn (£11.8bn) deal goes ahead it would create one of the world's biggest steel companies outside of China.
The takeover has been in limbo since it was first announced in December 2023.In one lawsuit, Nippon Steel and US Steel have asked asked the court to set aside the review process of the Committee on Foreign Investment in the US, which has the power to vet foreign takeovers of US firms, saying it "failed to conduct a good faith, national security-focused regulatory review process".Additionally, the companies are also suing the president of the United Steelworkers trade union, David McCall, and the chief executive of rival steel firm Cleveland-Cliffs, Lourenco Goncalves, for "their illegal and coordinated actions aimed at preventing the transaction".On Friday, the United Steelworkers trade union said it had "no doubt" that blocking the takeover was the "right move for our members and our national security".The union accused Nippon of undermining the US steel industry for decades through measures including dumping its products on the US market.Nippon Steel and US Steel said they have "engaged in good faith with all parties" to show how the deal "will enhance, not threaten, United States national security" and how it would strengthen America's domestic steel industry "against the threat from China".They also reiterated that Nippon was prepared to invest $2.7bn in Pittsburgh-based US Steel.Earlier on Monday, Japan's Prime Minister Shigeru Ishiba expressed his concerns about the US decision to block the takeover and the impact it might have on trade relations between the two G7 countries."Unfortunately, it is true that we have heard concerns voiced by the Japanese industries over future investments between Japan and the US. We must view this issue as a grave matter," Mr Ishiba said.He added that while it was inappropriate for his government to comment on individual companies: "We must insist on an explanation as to why there are security concerns, otherwise there will be no progress in future discussions."