Steel Giants Sue Over Vetoed Merger, Accuse Rival of Illegal Sabotage
Updated by Reuters/kro Tokyo
Steel giants Nippon Steel and US Steel are taking legal action against the US government.
In the wake of President Joe Biden's veto, U.S. Steel and Nippon Steel have taken their merger battle to the courts. The steel titans filed two lawsuits on Monday, challenging the review process of the U.S. Committee on Foreign Investment (CFIUS) and Biden's veto, alleging "unlawful political interference" among other reasons. The second lawsuit targets rival Cleveland-Cliffs, its CEO Lourenco Goncalves, and the head of the steelworkers' union USW, David McCall, for "illegal and coordinated actions" aimed at blocking the transaction. Nippon Steel outbid Cleveland-Cliffs and other steel companies in the bidding war for U.S. Steel at the end of 2023.
The $14.9 billion acquisition of U.S. Steel by Nippon Steel has sparked controversy, with fears of potential job losses and threats to U.S. national security. Critics, including the powerful steelworkers' union USW and then-President Donald Trump, have spoken out against the deal. Facing declining revenues and profits, U.S. Steel warned of job losses if the deal collapses. Shareholders of the U.S. company had overwhelmingly approved the acquisition the previous year.
To assuage concerns, Nippon Steel recently offered significant concessions to the U.S. government and promised to honor all agreements between U.S. Steel and the unions. The Japanese company aims to boost its annual crude steel production capacity from its current 65 million tons to 85 million tons through the acquisition, with long-term goals of reaching 100 million tons, making it the second-largest crude steel producer globally after China Baowu Steel Group.
Nippon Steel has not finalized a financing plan for the acquisition but hinted at the possibility of issuing equity. The company's stock incurred only a minor daily loss on Monday compared to the market as a whole, suggesting a sense of relief as financial concerns related to the deal have temporarily eased. However, without the acquisition of U.S. Steel, Nippon Steel might face new medium- and long-term growth strategy concerns.
The lawsuit against Cleveland-Cliffs, Goncalves, and McCall is currently paused pending a fresh CFIUS review ordered by President Trump. A federal court had originally scheduled oral arguments for May, but the DOJ requested a 60-day pause to accommodate Trump’s new CFIUS review. The court has yet to rule on the stay motion as of April 8, 2025.
CFIUS has 45 days to submit recommendations, after which Trump could approve a restructured deal or maintain the block. The court case may resume depending on the review’s outcome.
- "U.S. Steel and Nippon Steel, in the midst of a legal battle, allege that rival Cleveland-Cliffs, CEO Lourenco Goncalves, and the head of the steelworkers' union USW, David McCall, engaged in illegal actions to block their $14.9 billion merger."
- "Nippon Steel, facing a potential pause in the acquisition of U.S. Steel due to the lawsuit, is considering issuing equity for its financing plan."
- "In an attempt to allay concerns, Nippon Steel offered substantial concessions to the U.S. government and assured adherence to all agreements between U.S. Steel and the unions."
- "Should the review by President Trump's new CFIUS rectify the alleged political interference and sabotage, the court case against Cleveland-Cliffs, Goncalves, and McCall may resume."
