Tit for Tat in the Steel Game - Lawsuit Amidst Rival Cleveland-Cliffs Accusations
Reuters/AP Tokyo
Japanese steel corporation Nippon Steel and American steel company US Steel are filing lawsuits against the United States government.
The steel titans U.S. Steel and Nippon Steel are giving the courts a run as they press on with their merger, following President Joe Biden's veto. The two heavyweights declared on Monday that they had filed two lawsuits - one aiming to contest the review process of the Committee on Foreign Investment in the United States (CFIUS) and Biden's veto, alleging "unjust political meddling" among other reasons. The second lawsuit is pointed at competitor Cleveland-Cliffs, its CEO Lourenco Goncalves, and the head of the United Steelworkers (USW) union, David McCall, accusing them of "illegal and synchronized schemes" to squash the transaction. Nippon Steel outplayed Cleveland-Cliffs and other steel contenders in the bidding war for U.S. Steel at the end of 2023.
The proposed $14.9 billion acquisition of U.S. Steel by Nippon Steel has stirred controversy. Critics shout it undermines U.S. national security and could result in job losses. The almighty USW union and the former U.S. President Donald Trump have both spoken out against the deal. U.S. Steel, grappling with dwindling revenues and profits, warned of potential job losses if the deal capsized. Shareholders of the U.S. company also voted resoundingly in favor of the takeover last year.
In a bid to quell concerns, Nippon Steel recently offered the U.S. government intriguing concessions and pledged to maintain all agreements between U.S. Steel and the unions.
Japanese dreamin' to boost its annual crude steel production capacity from over 65 million tons to 85 million tons through the acquisition. Long haul, Nippon Steel aims for an annual capacity of 100 million tons, placing it as the world's second-largest crude steel producer, next to China Baowu Steel Group.
Nippon Steel hasn't finalized a financing plan for the acquisition just yet, but they've whispered about the possibility of issuing new shares. Finances experts viewed the company's stock enduring a minimal daily loss on Monday as a sigh of relief, as financial uncertainties related to the deal temporarily eased. However, without U.S. Steel in the bag, Nippon Steel might face fresh challenges concerning its mid-term and long-haul expansion strategy.
Background
Mickey Mouse? Not quite. Here's what you should know about the current legal entanglements:
- Former President Trump's Intervention: On April 7, 2025, Donald Trump swung by, ordering CFIUS to perform a shiny new national security review of Nippon Steel's acquisition of U.S. Steel. This 45-day review process has given the deal a fresh lease on life, with U.S. Steel's stock soaring over 13% on the news.[1][2][4]
- Legal Strategy and Charges: The firms previously sued CFIUS in January 2025, accusing Biden's decision to kibosh the deal of being politically motivated to win the USW’s backing in Pennsylvania.[1][2][5] Their lawsuit alleges CFIUS’s initial review lacked fairness and due process.[4][5], although legal experts note challenges like these rarely succeed due to courts’ deference to national security decisions.[5]
- Ancora Holdings Suspending Opposition: Activist investor Ancora Holdings parked its crusade against the merger on April 9, 2025, following Trump’s entrance, signifying reduced resistance from shareholders.[3]
- Cleveland-Cliffs Undefined Role: The materials provided do not mention an active lawsuit against Cleveland-Cliffs. However, past reports (not found in these sources) suggest Cleveland-Cliffs had previously shown interest in acquiring U.S. Steel but are not directly discussed in the current legal conflicts against CFIUS/Biden in these papers. The central litigation centers around CFIUS’s review process and presidential authority.[1][4][5]
Nippon Steel insists on owning the whole shebang for technological integration, dismissing joint venture deals as insufficient.[4] The new CFIUS review could strengthen the companies' argument that the initial block was procedurally flawed.[4]
- The steel titans U.S. Steel and Nippon Steel have accused Cleveland-Cliffs, its CEO Lourenco Goncalves, and the head of the United Steelworkers (USW) union, David McCall, of allegedly participating in "illegal and synchronized schemes" to obstruct the proposed $14.9 billion acquisition.
- In addition to the lawsuits filed against CFIUS and President Joe Biden's veto, U.S. Steel and Nippon Steel have another lawsuit targeting their competitor Cleveland-Cliffs with claims of legal manipulation.
- The industry is monitoring Nippon Steel's financing plans closely, as the acquisition of U.S. Steel is yet to be finalized, and the possibility of issuing new shares has been hinted at.
- The steelworkers union, led by David McCall, is among the entities accused by Nippon Steel and U.S. Steel of involvement in "illegal and synchronized schemes" to scuttle the transaction, as outlined in their lawsuits.
