US Steel and Nippon sue Biden administration, USW and Cleveland-Cliffs over blocked merger

CNN New York —

US Steel and Nippon, whose $14.3 billion merger was blocked by President Joe Biden last week, filed a lawsuit against the US government on Monday, claiming that Biden's executive order barring the companies from regroup had been signed for purely political reasons.

The legal actions filed today demonstrate Nippon Steels and US Steels' continued commitment to completing the transaction despite political interference, the companies said in a statement.

The costume is no surprise. The day Biden issued an order blocking the deal, the companies called the action a blatant violation of due process and said they had no choice but to take all appropriate steps to protect our legal rights .

Biden has been talking about his opposition to the deal for months. The company's statement said Biden ignored the rule of law to curry favor with the United Steelworkers union and support its political agenda.

In addition to the lawsuit seeking to overturn Biden's order, the companies filed a separate suit against Lourenco Goncalves, CEO of rival steelmaker Cleveland-Cliffs, and Dave McCall, president of the United Steelworkers union, for their actions to block the deal, which the suit accuses of anticompetitive and racketeering activities illegally designed to prevent any party other than Cliffs from acquiring US Steel as part of an illegal campaign to monopolize critical domestic markets steel.

In addition to seeking to prevent Cliffs and the USW from acting together, this separate lawsuit seeks substantial financial damages for their conduct.

The White House defended the decision to block the deal in a statement released Monday.

A committee of national security and trade experts determined the acquisition would create a risk to U.S. national security, spokeswoman Robyn Patterson said. President Biden will never hesitate to protect this nation's security, its infrastructure, and the resilience of its supply chains.

USW President McCall again issued a statement praising Biden's action and denouncing the lawsuit.

We are reviewing the complaint and will vigorously defend against these baseless allegations, he said.

Cleveland-Cliffs had no immediate response to the lawsuits.

In August 2023, US Steel announced that it had received several offers to purchase the company and would evaluate the offers. He confirmed that one of the offers came from Cleveland-Cliffs, which had already overtaken US Steel to become America's second-largest steelmaker behind mini-mill operator Nucor, but that those negotiations had broken down.

The Cleveland-Cliffs offer was worth about $7.3 billion in cash and stock at the time, about half of what Nippon would ultimately offer when it closed the deal to buy US Steel in December 2024. But as a unionized steelworker, Cleveland-Cliffs had the support of the United Steelworkers Union in its bid.

Last summer, U.S. Steel announced that without the investment in its older, union-represented plants promised by Nippon Steel as part of the deal, it could be forced to close its plants. In response, Cleveland-Cliffs said it would be willing to purchase these plants.

Opposition to Nippon Steel's purchase of US Steel has been bipartisan, with Vice President-elect J.D. Vance being an early opponent of the deal. President-elect Donald Trump also vowed to block the deal if it was still in effect once he takes office later this month.

The proposed purchase was inevitably unpopular. US Steel was once a symbol of American industrial might. It was the most valuable company in the world and the first to be worth $1 billion shortly after its founding in 1901. It was also crucial to the American economy and to cars, appliances, bridges and skyscrapers. -sky which concretely indicated this force.

But it has suffered decades of decline since its post-World War II heyday. It is no longer the largest U.S. steel producer and is a relatively minor employer, with 14,000 U.S. employees, 11,000 of whom are members of the United Steelworkers Union. But it's still not a business that politicians who like to talk about American greatness want to see fall into foreign hands, especially in the politically important state of Pennsylvania.

Although it no longer employs as many people as before, US Steel reports that nearly 18,000 retirees and beneficiaries draw benefits from its pension funds. And there are hundreds of thousands whose parents, grandparents or even great-grandparents worked at US Steel at some point.

But some fear the move will drive away needed foreign investment in other U.S. industries and could end up hurting the future competitiveness of U.S. steel.

Late last month, the Committee on Foreign Investment in the United States, known colloquially as CFIUS, informed Biden that it had not reached consensus on whether selling the steels Americans in Nippon would or would not pose a national security risk, leaving the decision to the President to determine whether or not to block the deal on national security grounds.

The president's decision was based on illegitimate and self-serving political considerations, which constitutes a blatant violation of the entire CFIUS process, which was created as an apolitical safeguard to protect national security, Nippon and US Steel said in the lawsuit against the federal government's action.

Even within the Biden administration, there was opposition within the Biden administration over whether or not to block the deal, despite Biden's stated opposition.

Bad decision, a senior administration official told CNN of Biden's upcoming move to block the deal. Doesn't really protect union jobs and can kill the business.

The USW strongly opposed the deal from the moment it was announced, arguing that Japan had not given it enough guarantees that union jobs would be protected at some of the company's oldest plants where union members work. .

The union said Friday that the company can continue to profitably operate these old factories without investment from Japan.

We are confident that with responsible management, US Steel will continue to support good jobs, healthy communities, and strong national and economic security well into the future, the union said in a statement Friday.

Nippon said it has no plans to close the integrated plants that U.S. Steel owns in Pennsylvania and Indiana, which make steel from raw materials such as iron ore. And he says he will honor all employment contracts with the United Steelworkers in addition to investing in the factories where union members work.

But the USW insists Japan's plans would put those union jobs at risk. Nippon intends, eventually, to shift production from integrated, union-represented plants in Pennsylvania and Indiana to US Steel's own mini-mills in Texas, where new steel is made by melting scrap metal. of steel.

This story has been updated with additional reporting and context.

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