U.S. Steel and its would-be Japanese suitor Nippon Steel have gone to court to defend their $15 billion merger, after President Biden on Friday moved to block the deal, citing national security concerns.
In a lawsuit filed Monday in federal court in Washington, the companies accuse the president of violating their due process rights and interfering with a good-faith regulatory review. The companies say Biden's opposition to the sale was designed to curry favor with the steelworkers' union in the politically important swing state of Pennsylvania.
A second lawsuit targets the international president of the steelworkers union, David McCall, and a rival steelmaking company, Cleveland Cliffs, which had made its own offer for U.S. Steel. That suit, filed in federal court in Pennsylvania, says the opponents tried to scuttle the sale in order to monopolize the domestic steel market.
"We remain confident that the transaction is the best path forward to secure the future of U. S. Steel – and we will vigorously defend our rights to achieve this objective," U.S. Steel and Nippon Steel said in a joint statement.
In prohibiting the sale last week, Biden said foreign ownership of U.S. Steel could jeopardize domestic supply chains and compromise national security.
"Without domestic steel production and domestic steel workers, our nation is less strong and less secure," the president said in a statement.
The White House defended the president's decision.
"A committee of national security and trade experts determined this acquisition would create risk for American national security," said spokeswoman Robyn Patterson in response to the lawsuit. "President Biden will never hesitate to protect the security of this nation, its infrastructure, and the resilience of its supply chains."
Nippon Steel and U.S. Steel insist their combination would enhance domestic steel production to better compete against China. Nippon Steel has pledged to invest $2.7 billion to upgrade U.S. Steel facilities, including aging blast furnaces in Pennsylvania and Indiana. U.S. Steel has warned that without that investment, it may have to refocus on newer, non-union steel mills in places like Arkansas, potentially jeopardizing thousands of unionized jobs.
An inter-agency committee that oversees foreign investment in the U.S. was unable to reach consensus on whether the sale would compromise national security. And some of Biden's top advisers urged him not to block the sale, the Washington Post reported.
"As a result of President Biden's undue influence to advance his political agenda, the Committee on Foreign Investment in the United States failed to conduct a good faith, national security-focused regulatory review process, depriving Nippon Steel and U. S. Steel of their rightful opportunity for fair consideration of the Transaction," the companies said.
Stock in U.S. Steel rose more than 4% in the first hour of trading Monday, after tumbling last week when Biden moved to block the sale.
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