Nippon Steel, U.S. Steel Aim to Prove Biden Was Politically Motivated in Blocking Takeover Deal

By Shunsuke Tanaka and Hiroyuki Tanaka / Yomiuri Shimbun Staff Writers

7:00 JST, January 9, 2025

Nippon Steel Corp. and U.S. Steel Corp. intend to prove in a lawsuit that U.S. President Joe Biden was politically motivated in blocking the Japanese steel giant’s proposed takeover.

The lawsuit, jointly filed by Nippon Steel and U.S. Steel, seeks to invalidate Biden’s order halting the deal and force the Committee on Foreign Investment in the United States (CFIUS) to conduct a new review of the acquisition plan.

The companies are trying to break out of a difficult situation by addressing the connection between the United Steelworkers (USW) union, which opposes the takeover, and political motivation for Biden, who was seeking votes for the presidential election, but the barriers to enacting the takeover plan are high.

“The CFIUS screening would have resulted in a different conclusion if it had been done properly based on the law,” Nippon Steel Chairman and Chief Executive Officer Eiji Hashimoto said at a press conference on Tuesday. “It was a political intervention from the beginning, with the conclusion already in mind.”

Hashimoto spoke harshly as he offered his criticism, occasionally referring to the president only as “Biden.”

Hashimoto said Biden’s decision to block the deal was shaped by U.S. competitor Cleveland-Cliffs Inc., which sought to ensure its superiority in the U.S. market.

Cleveland-Cliffs leveraged the political power of the USW, which could rally the votes of its 850,000 members, to urge Biden to block the takeover, according to Hashimoto. Biden’s actions were motivated “by political reasons, of all things.”

In an announcement about the lawsuit on Monday, Nippon Steel listed the issues it had with the takeover review by the CFIUS.

Hashimoto said that the USW expressed support for Biden several days after he announced his intention to block the deal, and that the CIFIUS screening delayed discussion about the planned buyout.

He added that Nippon Steel was asked to provide written responses more quickly than usual and that USW members who were in favor of the acquisition were not questioned.

In addition to the administrative lawsuit against the Biden administration, Nippon Steel and U.S. Steel also filed a civil lawsuit against Cleveland-Cliffs and USW head David McCall.

In the administrative lawsuit, evidence gathering will likely be difficult for national security reasons.

In the civil suit, the two firms plan to collect emails and other evidence from those involved to prove that Biden had political reasons for issuing the order blocking the deal. This evidence could then be used in the administrative lawsuit to have Biden’s order overturned.

Biden has ordered Nippon Steel to “take all steps necessary to fully and permanently abandon the proposed transaction no later than 30 days from the date of this order” in principle.

The two companies plan to file a motion for an injunction in U.S. court by Feb. 2, the deadline given by Biden, to prevent the order blocking the deal from taking effect while the lawsuit is pending.

However, there is little prospect of the takeover going through. In the past eight cases in which U.S. presidents have blocked proposed acquisitions after CFIUS reviews, only one case has been overturned by a court.

“Nippon Steel will likely have a hard time getting recognition for its argument,” said Akira Inoue, an attorney with Baker & McKenzie who is familiar with U.S. regulations. “An administrative lawsuit could be dismissed early on. In civil cases, it can take up to two years to gather evidence.”