U.S. Steel and Nippon Steel sued the U.S. government on Monday to revive their $14 billion merger after President Biden blocked the deal last week. The CEO of U.S. Steel called. It's a “shameful” capitulation to union leaders.
The lawsuit, filed in federal court in Washington, accuses Biden and administration officials of corrupting the deal review process and harming American steelworkers by blocking the deal.
“Nippon Steel and U.S. Steel are disappointed to see this nation's national security apparatus being exploited so clearly and unfairly to win elections and reward political favors,” the companies said. said in a joint statement on Monday.
“Nippon Steel and U.S. Steel are entitled to a fair process and are left with no choice but to challenge the decision and the process that led to it in court.”
Biden moved to block the merger on Friday after the Committee on Foreign Investment in the United States refused to make a decision after a year-long review process. The president said he intended to halt the merger, citing national security concerns.
“It is my solemn responsibility as President to ensure that America has a strong, domestically owned and operated steel industry that can continue to provide the source of our national strength at home and abroad, now and into the future,” Biden said in a statement. ” he said. “And preventing foreign ownership of this important American company is a fulfillment of that responsibility.”
The president's move to scrap the deal is a significant exercise of executive power on an increasingly politicized election-year issue. His announcement came with just over two weeks left in his term. He previously pledged to maintain U.S. ownership of U.S. Steel, and President-elect Donald Trump has promised to scrap the deal when he is re-elected for a second term.
U.S. Steel and Nippon Steel are asking CFIUS to conduct a second review of their $14 billion merger.
A US steelmaker has warned that thousands of union jobs are at risk if its merger with a Japanese company fails. U.S. Steel may close some plants and move its headquarters from the key battleground state of Pennsylvania, the company announced in September.
“President Biden's actions today are shameful and corrupt,” U.S. Steel CEO David Britt said in a statement Friday following Biden's announcement. “He ignored contact with union members and rewarded union leaders with political payoffs, while undermining our company's future, our employees, and our national security.”
According to the Washington Post, some of Biden's senior advisers fear blocking the deal could sour relations with Japan, a close ally and major investor in U.S. businesses. has also been announced.
“He insulted Japan, a critical economic and national security ally, and jeopardized America's competitiveness,” Britt said. “Chinese Communist Party leaders in Beijing are dancing in the street.''
The lawsuit against the Biden administration also names Treasury Secretary Janet Yellen and Attorney General Merrick Garland to lead CFIUS.
In the lawsuit, the companies argued that the committee's review of the merger was flawed because Biden publicly disapproved of the deal months earlier. They also argued that the commission refused to engage when companies tried to offer solutions to alleviate national security concerns.
First announced in December 2023, Japan's proposal immediately faced fierce opposition from politicians and labor union leaders. Both Democratic and Republican lawmakers denounced the deal, treating it as a symbol of the eradication of American-owned businesses.
The United Steelworkers union claimed it was blindsided by the merger and argued that Nippon Steel was unlikely to honor the union's contracts and protect workers' pensions.
U.S. Steel shareholders approved the deal in April, but political opposition to the bid only grew as the presidential election approached. Vice President Kamala Harris also voiced opposition to the deal during her campaign.
According to communications between the committee and Nippon Steel reviewed by CFIUS, CFIUS said the review of the deal stalled due to concerns that Nippon Steel's large and overseas factories could threaten U.S. Steel's own production. It has been reported. wall street journal.
The steelmaker also filed a lawsuit Monday against Cleveland-Cliffs, the U.S. steel company that previously tried to take over U.S. Steel, its chief executive officer, and David McCall, president of the powerful United Steelworkers union. The lawsuit alleges that the Cleveland-Cliffs and union bosses conspired to break the agreement.
CFIUS, a commission established in the 1970s to vet foreign investments due to national security concerns, has often blocked Chinese investments due to political influence. Since 1990, U.S. presidents have blocked eight other foreign deals, according to the Congressional Research Service.
U.S. Steel and Nippon Steel said Biden's involvement was a slap in the face to Japan, a longtime U.S. ally.
After Biden's announcement on Friday, Japan's prime minister said the decision could affect future Japanese investment in the United States.
Prime Minister Shigeru Ishiba told reporters, “Unfortunately, it is true that there are voices of concern within Japanese industry regarding future Japanese-American investment.'' According to Japanese media. “That's something we have to take seriously.”
He said the US needs to “clearly explain” why the deal raises national security concerns.
Ishiba added, “Although it is inappropriate for the Japanese government to comment on the management of individual companies that are under review under U.S. domestic law, we will strongly urge the U.S. government to take measures to eliminate these concerns.'' .
