Nippon Steel Weighs Legal Action After Biden Blocks US Steel Deal

Nippon Steel is contemplating legal action against the United States government after President Joe Biden blocked the Japanese company’s proposed multibillion-dollar acquisition of US Steel, a move that has stirred significant controversy. According to CNN, the $14.3 billion bid, aimed at revitalizing the struggling American steelmaker, was rejected last week on grounds of national security and supply chain protection.

In remarks broadcast on Monday and confirmed by CNN, Nippon Steel’s president, Tadashi Imai, hinted at a possible legal challenge. “We are considering this as an important option,” Imai told reporters. “I think we can take action, including announcing (a response), without taking too much time.”

Biden’s intervention, which came just weeks before the end of his administration, represents a rare use of executive authority to block a major international business deal. The decision has drawn praise from labor groups but sparked concerns about the future of foreign investment in U.S. industries.

The United Steelworkers (USW), the union representing thousands of American steelworkers, welcomed the move. Per CNN, USW International President David McCall issued a statement commending the president’s decision as “the right move for our members and our national security.” The union has long opposed foreign ownership of US Steel, viewing it as a potential threat to American jobs and industrial independence.

However, the blocked deal has also triggered concerns over US Steel’s financial future. The company has argued that it urgently needs the investment proposed by Nippon Steel to modernize its facilities and keep operations running. According to the company, failure to secure the funds could result in the closure of several mills represented by the USW.

Related: Biden Blocks Nippon Steel’s $14.9 Billion Bid for US Steel

David Burritt, president and CEO of US Steel, did not hold back in his criticism of the administration’s move. He described Biden’s decision as “shameful and corrupt,” reflecting the deep frustration within the company over the government’s handling of the deal.

The process leading up to Biden’s decision has been fraught with political and economic implications. The Committee for Foreign Investment in the United States (CFIUS) had reviewed the proposed sale but was unable to reach a consensus on whether the deal posed a national security risk. CNN reported that the committee’s indecision left the final say to Biden, who opted to block the acquisition.

Nippon Steel and US Steel have consistently maintained that the acquisition is essential for the long-term stability of American steel production. The proposed $2.7 billion investment from Nippon was touted as a lifeline for US Steel, which has been struggling to compete in a rapidly changing global steel market.

As the fallout from the blocked deal continues, industry analysts are warning that the decision could have broader implications for foreign investment in the United States. Critics argue that rejecting a high-profile acquisition like this could deter other foreign companies from pursuing similar deals, potentially leaving American firms without the financial backing they need to remain competitive.

Imai’s comments suggest that Nippon Steel is unlikely to back down without a fight. “We are entitled to a proper review,” he told reporters, emphasizing the company’s belief that the review process had been mishandled. “The review process to date and the US government’s decision is not a very proper review. Our company cannot allow this to continue, so we are considering all options for future action.”

Source: CNN