United States Steel Corporation (NYSE:X) (US Steel) and Nippon Steel have taken legal action following President Joe Biden's decision to block Nippon's $15 billion acquisition of US Steel.
The companies have filed two lawsuits alleging political interference and illegal attempts by rivals to prevent the deal, which they argue would benefit US national security and strengthen the American steel industry.
The first lawsuit, filed in the US Court of Appeals for the District of Columbia Circuit, challenges Biden's decision to block the acquisition. Nippon Steel and US Steel argue that the president's decision was politically motivated and lacked a solid legal foundation.
They allege that the Committee on Foreign Investment in the United States (CFIUS) failed to conduct a proper review of the transaction, which they believe would have strengthened US national security by revitalizing key steel operations and protecting jobs.
The second lawsuit, filed in the US District Court for the Western District of Pennsylvania, accuses Cleveland-Cliffs, its CEO Lourenco Goncalves, and United Steelworkers President David McCall, of working together to prevent the transaction.
The lawsuit alleges that Cleveland-Cliffs, in coordination with the union, engaged in anticompetitive and racketeering activities to block the acquisition and prevent any competitor from acquiring US Steel.
“Today’s legal actions demonstrate Nippon Steel’s and US Steel’s continued commitment to completing the transaction – despite political interference with the CFIUS process and the racketeering and monopolistic conspiracies of Cleveland-Cliffs and USW President David McCall – for the benefit of all stakeholders, including US Steel’s shareholders, who will receive the agreed upon $55 per share upon the transaction closing,” the companies said in a statement.
“We remain confident that the transaction is the best path forward to secure the future of US Steel – and we will vigorously defend our rights to achieve this objective.”
Biden's decision to block the acquisition, made after CFIUS failed to reach a consensus on national security risks, emphasized the importance of maintaining a strong domestically owned steel industry for national security.
President-elect Donald Trump has also opposed the deal, highlighting his plan to support US Steel's profitability through tariffs and other measures.
Shares of US Steel were boosted by the litigation news, up 4.2% at approximately $32 in early trade on Monday.