Nippon Steel and US Steel are betting Donald Trump can be persuaded to back their $15bn deal, accusing President Joe Biden of blocking the transaction to win union support in last year’s presidential election.
The two companies, which have battled opposition to the deal for more than a year, are banking that lawsuits they filed this week against Biden will compel his successor to endorse the deal when he returns to the White House this month.
One person familiar with the litigation strategy said Tokyo-based Nippon, which proposed the acquisition of US Steel in the middle of the 2024 presidential race, is hoping Trump’s instincts to undo Biden’s policies will trigger the reversal. Trump announced his opposition to the deal during the campaign.
“You could see a scenario where president Trump doesn’t want to defend the corrupt practices of his predecessor,” the person said. “In that scenario, this deal shouldn’t even end up on the president’s desk.”
Biden cited national security as he blocked the deal last Friday, fulfilling a vow made this year to stop the 123-year-old iconic rust-belt employer falling into the hands of a foreign company.
The president’s decision followed an inconclusive review of the deal by the Committee on Foreign Investment in the US, the government panel tasked with vetting transactions for national security concerns.
“The process has been corrupt,” US Steel chief executive David Burritt said in an interview with CNBC on Tuesday. “God knows this process has been tainted from the very beginning and we need to fix it. This should not have happened.”
The companies were now trying to “right the wrongs of this president and make sure that Cfius is actually followed”, Burritt added.
In one lawsuit filed on Monday, the companies accused the Biden administration of blocking the deal to serve the president’s “personal political agenda”.
The suit, filed in a federal appeals court in Washington, also took aim at members of Cfius, including Treasury secretary Janet Yellen and attorney-general Merrick Garland. The suit argues the process was a “sham”.
The National Security Council said Cfius had concluded that the deal would “create risk for American national security”.
“President Biden will never hesitate to protect the security of this nation, its infrastructure, and the resilience of its supply chains,” an NSC spokesperson said.
A second suit targets rival producer Cleveland-Cliffs, its chief executive Lourenco Goncalves and United Steelworkers union president David McCall, accusing them of “illegal and co-ordinated actions aimed at preventing the transaction”. Cleveland-Cliffs was the runner-up in the 2023 auction for US Steel.
Nippon’s offer to buy the steel producer became a flashpoint during the presidential campaign as Trump and Biden courted blue-collar voters in the crucial swing state of Pennsylvania, where US Steel is based.
The USW has worked to block the deal, even though US Steel warned the transaction’s failure would force it to cut jobs.
Trump on Monday reiterated his opposition to the Nippon Steel takeover. “Why would they want to sell U.S. Steel now when Tariffs will make it a much more profitable and valuable company?” he said on Truth Social, in a reference to his plan to impose tariffs on imports. The president-elect’s team did not immediately respond to a request for more comment on Tuesday.
US Steel is the country’s third-largest player after Nucor and Cleveland-Cliffs and is a key producer for the American energy and transportation sectors, and military. Biden said its sale to Nippon would “create risk for our national security and our critical supply chains”.
Trump has been persuaded to reverse his positions on high-profile commercial issues before, including a recent effort to forestall the US government’s move to block TikTok, the social media platform owned by China-based ByteDance — a ban he supported during his first term.
“There is a world in which this goes back to Trump,” said Stephen Heifetz, a partner at law firm Wilson Sonsini, who previously served on Cfius. Only one other company, Chinese-owned Ralls, has successfully sued Cfius for violating due process. “I would underscore we’re in completely uncharted territory. Anything could happen.”
Aimen Mir, a partner at law firm Freshfields and former Cfius official, said there was very little evidence that Nippon, based in a country that is a treaty ally of the US, posed a national security risk. It is the first time a non-Chinese deal with no military implications has been blocked, he added.
“[Biden’s] decision appears to be premised, at best, on flawed national security arguments and, at worst, on political motivations,” Mir said.
US Steel’s Burritt has warned of lay-offs and mill closures without the $2.7bn investment Nippon has said it will make if the deal goes through.
“The US [steel] industry used to be the top in the world. Now it’s a laggard,” said Todd Tucker, the director of the industrial policy and trade programme at the Roosevelt Institute. The deal’s demise would leave US Steel in “crisis mode”, he added.
Burritt in November said the company’s earnings had declined year-over-year as steel prices fell, but that the company had “demonstrated resilience in our business model”. The original agreement with Nippon requires the Japanese company to pay a $565mn break-fee if the deal is blocked.
Additional reporting by Demetri Sevastopulo in Washington
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