Flags are decorated on the fence in front of the U.S. Steel Corp. Edgar Thomson Works steel plant in Braddock, Pennsylvania, U.S., Monday, Aug. 14, 2023.
Justin Merriman | Bloomberg | Getty Images
United States Steel Corporation and Nippon Steel They said on Monday they had filed a lawsuit against U.S. President Joe Biden’s order blocking the Japanese company’s $14.9 billion takeover of the U.S. steelmaker.
The lawsuit asks the court to put aside the CFIUS review process and Biden’s order, citing “violations of the Constitution’s guarantees of due process and statutory procedural requirements, as well as unlawful political influence.”
The case was filed in the U.S. 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, accusing them of “unlawful and coordinated actions” aimed at blocking the deal.
Last week, Biden blocked the proposed purchase, citing national security concerns, a potentially fatal blow to the controversial program after a year of review.
Nippon Steel paid a huge premium in the December 2023 auction, beating out rivals such as Cleveland Cliffs, ArcelorMittal and Nucor in betting on Biden’s infrastructure spending bill.
Political and union resistance to the deal has intensified in recent months. Biden and President-elect Donald Trump, who will be inaugurated later this month, have opposed the deal.
The White House has urged a review of the agreement, given the central role U.S. steel companies play in producing materials critical to national security.
Reuters reported in September, citing sources, that the Biden administration told Nippon Steel in a letter that the deal would harm the U.S. steel industry and pose a national security risk.
The Committee on Foreign Investment in the United States, which is reviewing the deal, failed to reach consensus, setting the stage for Biden to block the merger.
U.S. Steel has warned that thousands of U.S. union jobs would be at risk if a deal was not reached and said it would close some steel plants.
The company also said it may move its headquarters out of the politically important state of Pennsylvania.
Despite opposition, U.S. Steel shareholders voted overwhelmingly to approve the acquisition last April.
The companies are also working to address concerns about the merger. Japan offered to move its U.S. headquarters to Pittsburgh, home to U.S. Steel, and pledged to abide by all agreements reached between U.S. Steel and the powerful Steelworkers union.
However, the backlash has proven to be a threat to the stock. U.S. Steel’s stock price failed to reach the offer price of $55 per share, indicating investor concerns about the timeline for closing the deal.
US Steel was founded in 1901 by American giants such as Andrew Carnegie, JP Morgan and Charles Schwab, and was closely related to the Great Depression and the aftermath of World War II. Industrial recovery is closely linked.
The company has been under pressure after several quarters of declining revenue and profits, making it an attractive takeover target for rivals looking to expand their U.S. market share.
