Troubled US Steel and Japanese giant Nippon Steel jointly filed a lawsuit on Monday challenging outgoing President Joe Biden’s decision to block their takeover deal.
Both companies accused the Biden administration of “illegal interference” in the transaction.
In an anticipated move, Biden blocked the deal last Friday after the Committee on Foreign Investment in the United States (CFIUS) failed last month to reach a consensus on potential national security risks.
What did the steel giants say?
The companies filed their case in the US Court of Appeals in Washington. He claimed Biden blocked the deal for “purely political reasons”.
The companies filed their lawsuits “to address ongoing illegal interference in the acquisition of US Steel by Nippon Steel,” he said.
He said the lawsuit aims to show that “President Biden ignored the rule of law to get his way [workers’ unions] And support their political agenda.”
CFIUS sent a report on the merger to Biden in December and he had 15 days to reach a final decision.
Nippon Steel and US Steel “failed to conduct a good faith, national security-focused regulatory review process,” it told CFIUS.
Also on Monday, Japanese Prime Minister Shigeru Ishiba urged the US to ease concerns that blocking the deal could hurt future investment.
Why did Biden stop the deal?
Biden vowed to stop the takeover in March. On Friday, he said that “Steel production – and the steel workers who produce it – are the backbone of our country.”
He also cited national security concerns.
The blocking of the deal severed a vital capital lifeline for the US steel icon. US Steel has said it will have to idle key mills if it fails to secure a promised $2.7 billion (about €2.6) investment from Nippon Steel.
The Japanese company had paid a huge premium to secure the purchase of US Steel, the country’s second-largest steel producer, in December 2023.
However, this controversial deal was opposed by the powerful United Steelworkers union (USW) as well as politicians.
Biden had previously been vocal about his intention to keep U.S. steel domestically owned and run.
President-elect Donald Trump, who will take office on January 20, has also vowed to block foreign takeovers of American companies.
Japan is a key ally of the US in the turbulent Indo-Pacific region, as both countries attempt to counter threats from North Korea along with China’s growing economic and military rise.
rmt/wd (AFP, AP)