Nippon Steel and US Steel are suing the US government to block a takeover, saying President Joe Biden “disregarded the rule of law to curry favor” with unions.
The two companies also claim that President Biden, who is entering the final weeks of his administration, stopped Nippon Steel from buying US Steel to pursue his own political agenda.
In rejecting the proposed deal on FridayPresident Biden said a strong domestic steel industry is essential to national security and sustainable supply chains, including the automotive and defense industries.
If the $14.9bn (£11.8bn) deal goes through, it would create one of the biggest steel companies in the world outside of China.
The takeover has been in limbo since it was first announced in December 2023.
In a lawsuit, Nippon Steel and US Steel asked the court to overturn the review process of the Committee on Foreign Investment in the US, which has the power to scrutinize foreign takeovers of US firms, saying it “failed to conduct a good faith, focused national security regulatory review process'.
The companies are also suing the president of the United Steelworkers union, David McCall, and the CEO of rival steelmaker Cleveland-Cliffs, Lourenco Goncalves, for “their illegal and coordinated actions aimed at preventing the deal.”
On Friday, the United Steelworkers union said there was “no question” that blocking the acquisition was “the right move for our members and our national security.”
The union accused Nippon of undermining the US steel industry for decades through measures including dumping its products on the US market.
Nippon Steel and US Steel said they had “worked in good faith with all parties” to show how the deal would “enhance, not threaten, the national security of the United States” and how it would strengthen the U.S. steel industry “against the threat from China.”
They also reiterated that Nippon is ready to invest $2.7 billion in Pittsburgh-based US Steel.
President-elect Donald Trump also said he would block the deal. On Monday, he posted on Truth Social saying, “Why would they want to sell US Steel now that the tariffs will make it a much more profitable and valuable company?”
Earlier on Monday, Japanese Prime Minister Shigeru Ishiba expressed concern over the US decision to block the takeover and the impact it could have on trade relations between the two G7 countries.
“Unfortunately, it is true that we have heard the concerns expressed by Japanese industries about future investment between Japan and the US.” We have to look at this problem as a serious matter,” Mr. Ishiba said.
He added that while it was inappropriate for his government to comment on individual companies: “We must insist on an explanation of why there are security concerns, otherwise there will be no progress in future discussions.”