Shoko Oda
Tue, January 7, 2025
(Bloomberg) -- Nippon Steel Corp. is not weighing any alternatives to its thwarted $14.1 billion takeover of United States Steel Corp., its chairman and CEO said on Tuesday, shortly after both companies filed US lawsuits to rescue the acquisition.
The Japanese firm’s planned purchase of its US rival was blocked last week by President Joe Biden after a year of diplomatic tension, political debate and lobbying efforts from the companies and unions. Biden, who had previously said he opposed the tie-up, cited national-security risks, despite Japan being a close ally.
The companies have filed a petition with the federal appeals court in Washington, arguing that the Committee on Foreign Investment in the United States failed to consider the deal on national security grounds, and that Biden’s order to block it was made for “purely political reasons.” They also filed a lawsuit against rival Cleveland-Cliffs Inc. and United Steelworkers President David McCall, alleging anticompetitive activities.
“There is no reason — or need — to give up on this deal,” Eiji Hashimoto, chairman and chief executive officer of the Japanese steelmaker, told reporters in Tokyo, adding that Nippon Steel and US Steel were focused on pushing ahead with the current agreement. “I have no thoughts of alternative plans.”
The two companies are asking the US Court of Appeals for the District of Columbia Circuit to set aside an “unlawful” review and Biden’s subsequent order, and to demand a new review, they said in a joint statement.
“There will be truths revealed through the lawsuit, like the fact that the review violated the law,” Hashimoto said. “By revealing that the review was not conducted with national security in mind, we believe there is a chance for us to win the lawsuit.”
A months-long court battle is now likely, but it is not clear that will improve the prospects for the deal to ultimately succeed — US law gives the president the power to kill any merger deemed a threat to national security. President-elect Donald Trump, meanwhile, has also voiced his opposition to the takeover.
The deal did create a split within the Biden administration, though. Secretary of State Antony Blinken, currently on a visit to Japan for farewell talks with Prime Minister Shigeru Ishiba, was among those who pitched an option to allow the deal with conditions. Proponents argued the block was an affront to a close ally, and undercut Biden’s efforts to reinvigorate alliances and create friendly supply chains.
Blinken and Japanese foreign minister Takeshi Iwaya met on Tuesday and exchanged views on the deal, according to a statement from Japan’s foreign ministry. The ministers “reaffirmed the importance of Japan-U.S. economic relations, including investments by Japanese companies in the U.S.,” the ministry said.
The head of Japan’s biggest business lobby group expressed worries over the impact of the deal being blocked on Japanese firms’ business activity in the US.
“We’re very concerned that this kind of decision will impact US-Japan economic relations,” said Masakazu Tokura, chairman of Keidanren. “It’s regrettable that America, which has been promoting an open and free trade and investment environment, has made such a decision.”
Hashimoto said the US market was “the most promising” among developed nations and “essential” for the company’s strategy — but Nippon Steel would continue to look at other growth markets, including India and Southeast Asia.
Nippon Steel’s deal to buy US Steel included a $565 million break fee for the American company. Hashimoto said that the penalty fee only comes into play if the merger contract breaks. That has not happened, he added.
--With assistance from Stephen Stapczynski, Yoshiaki Nohara and Koh Yoshida.
(Updates story with statement from Japan’s foreign ministry and comment from Japanese business lobby group from 9th paragraph.)
Bloomberg Businessweek
Blinken visits Japan as Nippon Steel decision weighs on relations
David Brunnstrom, Simon Lewis, Trevor Hunnicutt and Tim Kelly
Updated Tue, January 7, 2025
WASHINGTON/TOKYO (Reuters) -U.S. President Joe Biden's decision to block Nippon Steel's $14.9 billion bid for U.S. Steel cast a shadow over Secretary of State Antony Blinken's visit to Japan on Tuesday for farewell meetings with Washington's most important ally in Asia.
The rejection, announced on Friday, has jolted U.S. efforts to boost ties just as neighbouring South Korea's political crisis potentially complicates a deepening trilateral relationship between Washington, Seoul and Tokyo formed to counter China's growing military power.
On Monday, Japanese Prime Minister Shigeru Ishiba described Biden's decision to block the sale of U.S. Steel to Nippon Steel as "perplexing".
While Japanese investment into the U.S. could also be chilled, analysts say that given the two countries' shared security concerns about China, any damage to their wider relationship will probably be limited amid political transition in the U.S. where Donald Trump becomes president on Jan. 20.
MEETINGS
Accompanied by White House National Security Adviser Jake Sullivan, Blinken met Japan's Foreign Minister Takeshi Iwaya in Tokyo followed by meetings with other senior Japanese officials including Ishiba.
Seven trips to Japan over the last four years "is evidence not just of the importance, but of the centrality the United States attaches to our partnership. President Biden asked me to come on this last trip to underscore that," Blinken told Iwaya.
"We have, between our two countries, a partnership that started out focusing on bilateral issues, that worked on regional issues and that now is genuinely global," he added.
Ahead of his trip, the State Department said that Blinken wanted to build on the momentum of U.S.-Japan-South Korea trilateral co-operation.
In Seoul on Monday, Blinken reaffirmed confidence in South Korea's handling of its political turmoil as investigators there sought to extend a warrant for the arrest of impeached President Yoon Suk Yeol.
Trump's allies have also reassured Seoul and Tokyo that he will support continuing efforts to improve ties and advance military, economic and diplomatic co-operation to counter China and North Korea, Reuters reported ahead of Trump's Nov. 5 re-election.
TENSION, LIMITED DAMAGE FROM NIPPON STEEL DECISION
Nippon Steel and U.S. Steel filed a lawsuit on Monday charging that Biden violated the U.S. Constitution by blocking their $14.9 billion merger through what they termed a sham national security review. They called for the U.S. federal court to overturn the decision.
Nicholas Szechenyi, a Japan expert at Washington's Center for Strategic and International Studies, said Biden's decision would make Blinken's Tokyo visit "awkward."
However, "Japan won't let the Nippon Steel decision poison the U.S.-Japan relationship; it's too important for Japan's national security," he said.
After meeting Ishiba at his residence on Tuesday, Blinken did not respond to questions shouted by reporters about the potential impact of Biden's U.S. Steel decision on bilateral ties.
They discussed security and economic ties including the "importance" of Japanese investments in the United States, according to a Japanese government press release.
A Japanese diplomat told Reuters Biden's decision could chill foreign direct investment, but hoped close U.S.-Japan relations would continue, with a strong emphasis on re-establishing the strong ties with Trump seen during his previous administration, and taking advantage of the increasingly hawkish mood in Washington on China.
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Business lobbies in both Japan and the U.S. pushed hard for the merger, backing their arguments with warnings about the effect on the U.S.-Japan relationship.
But the merger faced opposition from both Biden and Trump, who was assiduously courted by Japan in the run up to his re-election.
Trump reiterated after his election win that he was "totally against" the merger and vowed to block it as president and support U.S. Steel with tax breaks and tariffs.
A former senior official in Trump's first administration told Reuters he believed Trump would have taken the same approach as Biden.
Marc Busch, a fellow at Georgetown University's McDonough School of Business, forecast "significant fallout" for U.S. efforts to work with allies to create resilient supply chains in the face of Chinese dominance or competition in key areas.
"Japan and other allies will have doubts about investing in or aligning with politically sensitive U.S. supply chains. China must be chuckling to itself that it could never have hoped for a better outcome."
(Reporting by David Brunnstrom, Simon Lewis, Andrea Shalal, Steve Holland, Trevor Hunnicutt, Alexandra Alper, Richard Chang and Tim Kelly; Editing by Raju Gopalakrishnan and Kate Mayberry)
Blinken seeks to strengthen relations with Japan in final visit
Euronews
Tue, January 7, 2025
US Secretary of State Antony Blinken met with Japan's Prime Minister Shigeru Ishiba in Tokyo on Tuesday during what is likely to be his final overseas trip in office, which includes visits to South Korea, Japan, and France.
In Tokyo, Blinken will “review the tremendous progress the US-Japan alliance has made over the past few years,” the US State Department said in a statement.
That includes a major arms sales approval announced on Friday under which the US will deliver some €3.5 billion in medium-range missiles, related equipment and training to Japan.
China has repeatedly complained about the potential sale, saying it will affect stability and security in the region, allegations that both Japan and the US reject.
The meeting comes just a day after the US accused Russia of supplying military equipment and training to North Korea.
Speaking with South Korean leaders on Monday, US Secretary of State Anthony Blinken expressed concern over deepening ties between Russian President Vladimir Putin and North Korea's Kim Jong-un.
"We have reason to believe that Moscow intends to share advanced space and satellite technology with Pyongyang and that Putin may be close to reversing a decadeslong policy by Russia and accepting DPRK's nuclear weapons program," he said.
These comments came just hours after North Korea fired a ballistic missile into the Eastern Sea, and also at a time of political turmoil in South Korea. The country's president Yoon Suk-yeol has been impeached after his short-lived martial law decree on 3 December.
Japanese Prime Minister Ishiba expressed concern that the North’s accelerated pace in missile tests is advancing its capabilities, just weeks before US president-elect Donald Trump's return to office.
North Korea last year tested various nuclear-capable systems that threaten its neighbours and the US, including a new solid-fuel intercontinental ballistic missile that achieved both the highest altitude and longest flight time of any missile the country has launched.
Blinken will wrap up his trip in Paris in meetings with French officials to discuss developments in the Middle East and European security, particularly in Ukraine.
Biden blocked US Steel and Nippon merger. The companies are now suing the US government
Swapna Venugopal Ramaswamy,
A US Steel sign is seen outside the Carrie Furnace which was once part of the abandoned Homestead Steel Works that continues to be further converted for public use after being designated as a historical landmark on January 21, 2020, in Swissvale, Pennsylvania.
In a statement on Friday, Biden said "a strong domestically owned and operated steel industry represents an essential national security priority and is critical for resilient supply chains."
"That is because steel powers our country: our infrastructure, our auto industry, and our defense industrial base," he said. "Without domestic steel production and domestic steel workers, our nation is less strong and less secure."The lawsuit in the U.S. Court of Appeals for the District of Columbia alleges that the Biden administration “ignored the rule of law” and rejected the merger to curry favor with the United Steelworkers (USW) labor union.
The companies also alleged that the Committee of Foreign Investment in the United States, a federal interagency committee, which reviewed the transaction, was “deeply corrupted by politics, and the outcome was pre-determined” to satisfy the political objectives of the Biden White House.
White House spokesperson Robyn Patterson responded to the lawsuit Monday by reiterating Biden's stance.
"A committee of national security and trade experts determined this acquisition would create risk for American national security," Patterson told USA TODAY in a statement. "President Biden will never hesitate to protect the security of this nation, its infrastructure, and the resilience of its supply chains.”
At the end of 2023, Japan was the top foreign investor in the U.S, investing $783.3 billion, according to the Bureau of Economic Analysis.
“It is shocking − and deeply troubling − that the U.S. government would reject a procompetitive transaction that advances U.S. interests and treat an ally like Japan in this way,” the companies said in a statement after Biden’s announcement.
The companies petitioned the court to set aside Biden’s order and instruct CIFIUS to conduct a new review.
The companies also filed a second lawsuit against rival steel company Cleveland-Cliffs, its CEO Lourenco Goncalves and Dave McCall, president of the United Steelworkers labor union (USW) for colluding to block the transaction.
The lawsuit alleged they had engaged in a “coordinated series of anticompetitive and racketeering activities” illegally designed to prevent “any party other than Cliffs from acquiring U. S. Steel.”
Swapna Venugopal Ramaswamy is a White House Correspondent for USA TODAY. You can follow her on X @SwapnaVenugopal
This article originally appeared on USA TODAY: Nippon and US Steel allege 'political interference' after Biden block
Nippon Steel could face growth challenges after U.S. Steel purchase blocked, analysts say
Noriyuki Hirata, Yuka Obayashi and Katya Golubkova
Updated Mon, January 6, 2025
The logos of Nippon Steel Corp. are displayed at the company headquarters in Tokyo
TOKYO (Reuters) -Japan's Nippon Steel may need to look at a revamp of its growth strategy after U.S. President Joe Biden blocked its proposed $14.9 billion acquisition of U.S. Steel, but its share price could bounce back in the near-term, analysts said.
Shares in Nippon Steel fell only slightly on Monday in their first trading since Biden on Friday rejected the deal after a year-long review, citing national security concerns.
Biden's opposition to the deal had been well-flagged and U.S. Steel shares had been trading far below the offer price as a result. Nevertheless, Japan's largest business lobby said the decision was a cause for concern regarding future U.S. investment.
Nippon Steel shares closed down 0.75% at 3,158 yen ($20.03) on Monday, compared with a 1% fall in broader Topix index. They settled at 3,182 yen on Dec. 30, the final trading day of 2024 on the Tokyo Stock Exchange, which was closed for the remainder of last week for the New Year holiday.
"Some investors may view the failure of the U.S. Steel acquisition as alleviating financial concerns due to the substantial amount of money involved in the deal," said Yoshihiko Tabei, chief strategist at Naito Securities.
Nippon Steel had not finalised a permanent financing plan for the all-cash deal but said raising equity was among the possibilities.
Tabei, however, noted that uncertainty remains, as achieving medium- to long-term growth will likely be challenging without expanding operations in the U.S.
With U.S. Steel, Nippon Steel aimed to raise its global crude steel production capacity to 85 million metric tons per year from 65 million tons now, nearing its long-term goal of lifting production capacity to 100 million tons.
The proposed deal has not yet been terminated by the companies even after Biden blocked the purchase.
In a joint statement, Nippon Steel and U.S. Steel called Biden's decision "unlawful" and said they will take all appropriate action to protect their legal rights.
Nippon Steel will owe U.S. Steel a $565 million break fee if it is not completed.
Still, some analysts think the failure of the deal could boost shares in Nippon Steel.
"Even if the deal does not proceed, Nippon Steel's earnings outlook remains unchanged, with significant growth expected in the next financial year starting in April," Yuji Matsumoto, an analyst at Nomura Securities said in a note.
"Additionally, the removal of financing uncertainty related to the acquisition is likely to support a near-term increase in the stock price," he said.
POTENTIAL LEGAL ACTION
Japan is the biggest investor into the U.S. economy and some business leaders and officials have voiced a concern that the deal's failure may cool down investment flow from the country.
Prime Minister Shigeru Ishiba said on Monday that he viewed Biden's decision as a "grave matter" that has led to concerns among Japanese businesses over the future of bilateral investment.
"We will strongly request the U.S. government to dash such concerns," he said. "Although (the U.S.) is an allied nation, for the future of our relations, we must insist on an explanation as to why there are security concerns."
The government has already conveyed its position to the Biden administration and will consider concrete support measures for Nippon Steel based on the company's response to the decision, Japanese industry minister Yoji Muto said on Monday.
Keidanren, the Japanese business lobby, echoed the government's response, adding Biden's decision to block the deal was "extremely disappointing".
"Despite the fact that Japan is the U.S.'s largest investor and ally, the decision, which was made on the grounds of economic security, is a cause for concern about the impact on future investment in the U.S. and on Japan-U.S. economic relations," the organisation said in a statement.
For both companies, the path forward is unclear.
Nippon Steel and U.S. Steel could sue the U.S. government, another buyer could swoop in for U.S. Steel, or Republicans who favour the deal could urge President-elect Donald Trump to find a way to approve it.
But some lawyers and consultants have said a legal challenge would be tough.
"Even if Nippon Steel is somehow able to resuscitate the deal, it faces a similarly dire prognosis from Trump. He would probably move quickly to kill it," said David Boling, a director at consultants Eurasia Group.
On Monday, Nippon Steel President Tadashi Imai told reporters filing a lawsuit against the U.S. government is one of the "important options", Nippon Television reported.
Imai said that the U.S. government's reviewing process and the decisions over its acquisition proposal did not seem properly handled, adding Nippon Steel is "entitled to a proper review," according to the report.
Imai said that it would not take long for the company to announce countermeasures to the U.S. government's decision, the report said.
($1 = 157.6300 yen)
(Reporting by Mariko Katsumura, Noriyuki Hirata, Yuka Obayashi, Katya Golubkova and Chang-Ran Kim; Editing by Jamie Freed and Christian Schmollinger, Kirsten Donovan)
Nippon, US Steel file suit after Biden administration blocks $15 billion deal
David Brunnstrom, Simon Lewis, Trevor Hunnicutt and Tim Kelly
Updated Tue, January 7, 2025
WASHINGTON/TOKYO (Reuters) -U.S. President Joe Biden's decision to block Nippon Steel's $14.9 billion bid for U.S. Steel cast a shadow over Secretary of State Antony Blinken's visit to Japan on Tuesday for farewell meetings with Washington's most important ally in Asia.
The rejection, announced on Friday, has jolted U.S. efforts to boost ties just as neighbouring South Korea's political crisis potentially complicates a deepening trilateral relationship between Washington, Seoul and Tokyo formed to counter China's growing military power.
On Monday, Japanese Prime Minister Shigeru Ishiba described Biden's decision to block the sale of U.S. Steel to Nippon Steel as "perplexing".
While Japanese investment into the U.S. could also be chilled, analysts say that given the two countries' shared security concerns about China, any damage to their wider relationship will probably be limited amid political transition in the U.S. where Donald Trump becomes president on Jan. 20.
MEETINGS
Accompanied by White House National Security Adviser Jake Sullivan, Blinken met Japan's Foreign Minister Takeshi Iwaya in Tokyo followed by meetings with other senior Japanese officials including Ishiba.
Seven trips to Japan over the last four years "is evidence not just of the importance, but of the centrality the United States attaches to our partnership. President Biden asked me to come on this last trip to underscore that," Blinken told Iwaya.
"We have, between our two countries, a partnership that started out focusing on bilateral issues, that worked on regional issues and that now is genuinely global," he added.
Ahead of his trip, the State Department said that Blinken wanted to build on the momentum of U.S.-Japan-South Korea trilateral co-operation.
In Seoul on Monday, Blinken reaffirmed confidence in South Korea's handling of its political turmoil as investigators there sought to extend a warrant for the arrest of impeached President Yoon Suk Yeol.
Trump's allies have also reassured Seoul and Tokyo that he will support continuing efforts to improve ties and advance military, economic and diplomatic co-operation to counter China and North Korea, Reuters reported ahead of Trump's Nov. 5 re-election.
TENSION, LIMITED DAMAGE FROM NIPPON STEEL DECISION
Nippon Steel and U.S. Steel filed a lawsuit on Monday charging that Biden violated the U.S. Constitution by blocking their $14.9 billion merger through what they termed a sham national security review. They called for the U.S. federal court to overturn the decision.
Nicholas Szechenyi, a Japan expert at Washington's Center for Strategic and International Studies, said Biden's decision would make Blinken's Tokyo visit "awkward."
However, "Japan won't let the Nippon Steel decision poison the U.S.-Japan relationship; it's too important for Japan's national security," he said.
After meeting Ishiba at his residence on Tuesday, Blinken did not respond to questions shouted by reporters about the potential impact of Biden's U.S. Steel decision on bilateral ties.
They discussed security and economic ties including the "importance" of Japanese investments in the United States, according to a Japanese government press release.
A Japanese diplomat told Reuters Biden's decision could chill foreign direct investment, but hoped close U.S.-Japan relations would continue, with a strong emphasis on re-establishing the strong ties with Trump seen during his previous administration, and taking advantage of the increasingly hawkish mood in Washington on China.
ADVERTISEMENT
Business lobbies in both Japan and the U.S. pushed hard for the merger, backing their arguments with warnings about the effect on the U.S.-Japan relationship.
But the merger faced opposition from both Biden and Trump, who was assiduously courted by Japan in the run up to his re-election.
Trump reiterated after his election win that he was "totally against" the merger and vowed to block it as president and support U.S. Steel with tax breaks and tariffs.
A former senior official in Trump's first administration told Reuters he believed Trump would have taken the same approach as Biden.
Marc Busch, a fellow at Georgetown University's McDonough School of Business, forecast "significant fallout" for U.S. efforts to work with allies to create resilient supply chains in the face of Chinese dominance or competition in key areas.
"Japan and other allies will have doubts about investing in or aligning with politically sensitive U.S. supply chains. China must be chuckling to itself that it could never have hoped for a better outcome."
(Reporting by David Brunnstrom, Simon Lewis, Andrea Shalal, Steve Holland, Trevor Hunnicutt, Alexandra Alper, Richard Chang and Tim Kelly; Editing by Raju Gopalakrishnan and Kate Mayberry)
Blinken seeks to strengthen relations with Japan in final visit
Euronews
Tue, January 7, 2025
US Secretary of State Antony Blinken met with Japan's Prime Minister Shigeru Ishiba in Tokyo on Tuesday during what is likely to be his final overseas trip in office, which includes visits to South Korea, Japan, and France.
In Tokyo, Blinken will “review the tremendous progress the US-Japan alliance has made over the past few years,” the US State Department said in a statement.
That includes a major arms sales approval announced on Friday under which the US will deliver some €3.5 billion in medium-range missiles, related equipment and training to Japan.
China has repeatedly complained about the potential sale, saying it will affect stability and security in the region, allegations that both Japan and the US reject.
The meeting comes just a day after the US accused Russia of supplying military equipment and training to North Korea.
Speaking with South Korean leaders on Monday, US Secretary of State Anthony Blinken expressed concern over deepening ties between Russian President Vladimir Putin and North Korea's Kim Jong-un.
"We have reason to believe that Moscow intends to share advanced space and satellite technology with Pyongyang and that Putin may be close to reversing a decadeslong policy by Russia and accepting DPRK's nuclear weapons program," he said.
These comments came just hours after North Korea fired a ballistic missile into the Eastern Sea, and also at a time of political turmoil in South Korea. The country's president Yoon Suk-yeol has been impeached after his short-lived martial law decree on 3 December.
Japanese Prime Minister Ishiba expressed concern that the North’s accelerated pace in missile tests is advancing its capabilities, just weeks before US president-elect Donald Trump's return to office.
North Korea last year tested various nuclear-capable systems that threaten its neighbours and the US, including a new solid-fuel intercontinental ballistic missile that achieved both the highest altitude and longest flight time of any missile the country has launched.
Blinken will wrap up his trip in Paris in meetings with French officials to discuss developments in the Middle East and European security, particularly in Ukraine.
Biden blocked US Steel and Nippon merger. The companies are now suing the US government
Swapna Venugopal Ramaswamy,
USA TODAY
Mon, January 6, 2025
U.S. Steel and Nippon Steel of Japan filed a lawsuit Monday against the U.S. government over President Biden’s decision to block their $14.3 merger.
The two companies alleged Biden’s actions were motivated by “purely political reasons.”
“Today’s legal actions demonstrate Nippon Steel’s and U. S. Steel’s continued commitment to completing the Transaction – despite political interference,” the companies said in a statement.
On Friday, Biden issued an executive order to halt the transaction saying Nippon’s acquisition of U.S. Steel would place America’s largest steel producers under foreign control and create a “national security” risk.
Mon, January 6, 2025
U.S. Steel and Nippon Steel of Japan filed a lawsuit Monday against the U.S. government over President Biden’s decision to block their $14.3 merger.
The two companies alleged Biden’s actions were motivated by “purely political reasons.”
“Today’s legal actions demonstrate Nippon Steel’s and U. S. Steel’s continued commitment to completing the Transaction – despite political interference,” the companies said in a statement.
On Friday, Biden issued an executive order to halt the transaction saying Nippon’s acquisition of U.S. Steel would place America’s largest steel producers under foreign control and create a “national security” risk.
A US Steel sign is seen outside the Carrie Furnace which was once part of the abandoned Homestead Steel Works that continues to be further converted for public use after being designated as a historical landmark on January 21, 2020, in Swissvale, Pennsylvania.
In a statement on Friday, Biden said "a strong domestically owned and operated steel industry represents an essential national security priority and is critical for resilient supply chains."
"That is because steel powers our country: our infrastructure, our auto industry, and our defense industrial base," he said. "Without domestic steel production and domestic steel workers, our nation is less strong and less secure."The lawsuit in the U.S. Court of Appeals for the District of Columbia alleges that the Biden administration “ignored the rule of law” and rejected the merger to curry favor with the United Steelworkers (USW) labor union.
The companies also alleged that the Committee of Foreign Investment in the United States, a federal interagency committee, which reviewed the transaction, was “deeply corrupted by politics, and the outcome was pre-determined” to satisfy the political objectives of the Biden White House.
White House spokesperson Robyn Patterson responded to the lawsuit Monday by reiterating Biden's stance.
"A committee of national security and trade experts determined this acquisition would create risk for American national security," Patterson told USA TODAY in a statement. "President Biden will never hesitate to protect the security of this nation, its infrastructure, and the resilience of its supply chains.”
At the end of 2023, Japan was the top foreign investor in the U.S, investing $783.3 billion, according to the Bureau of Economic Analysis.
“It is shocking − and deeply troubling − that the U.S. government would reject a procompetitive transaction that advances U.S. interests and treat an ally like Japan in this way,” the companies said in a statement after Biden’s announcement.
The companies petitioned the court to set aside Biden’s order and instruct CIFIUS to conduct a new review.
The companies also filed a second lawsuit against rival steel company Cleveland-Cliffs, its CEO Lourenco Goncalves and Dave McCall, president of the United Steelworkers labor union (USW) for colluding to block the transaction.
The lawsuit alleged they had engaged in a “coordinated series of anticompetitive and racketeering activities” illegally designed to prevent “any party other than Cliffs from acquiring U. S. Steel.”
Swapna Venugopal Ramaswamy is a White House Correspondent for USA TODAY. You can follow her on X @SwapnaVenugopal
This article originally appeared on USA TODAY: Nippon and US Steel allege 'political interference' after Biden block
Nippon Steel could face growth challenges after U.S. Steel purchase blocked, analysts say
Noriyuki Hirata, Yuka Obayashi and Katya Golubkova
Updated Mon, January 6, 2025
The logos of Nippon Steel Corp. are displayed at the company headquarters in Tokyo
TOKYO (Reuters) -Japan's Nippon Steel may need to look at a revamp of its growth strategy after U.S. President Joe Biden blocked its proposed $14.9 billion acquisition of U.S. Steel, but its share price could bounce back in the near-term, analysts said.
Shares in Nippon Steel fell only slightly on Monday in their first trading since Biden on Friday rejected the deal after a year-long review, citing national security concerns.
Biden's opposition to the deal had been well-flagged and U.S. Steel shares had been trading far below the offer price as a result. Nevertheless, Japan's largest business lobby said the decision was a cause for concern regarding future U.S. investment.
Nippon Steel shares closed down 0.75% at 3,158 yen ($20.03) on Monday, compared with a 1% fall in broader Topix index. They settled at 3,182 yen on Dec. 30, the final trading day of 2024 on the Tokyo Stock Exchange, which was closed for the remainder of last week for the New Year holiday.
"Some investors may view the failure of the U.S. Steel acquisition as alleviating financial concerns due to the substantial amount of money involved in the deal," said Yoshihiko Tabei, chief strategist at Naito Securities.
Nippon Steel had not finalised a permanent financing plan for the all-cash deal but said raising equity was among the possibilities.
Tabei, however, noted that uncertainty remains, as achieving medium- to long-term growth will likely be challenging without expanding operations in the U.S.
With U.S. Steel, Nippon Steel aimed to raise its global crude steel production capacity to 85 million metric tons per year from 65 million tons now, nearing its long-term goal of lifting production capacity to 100 million tons.
The proposed deal has not yet been terminated by the companies even after Biden blocked the purchase.
In a joint statement, Nippon Steel and U.S. Steel called Biden's decision "unlawful" and said they will take all appropriate action to protect their legal rights.
Nippon Steel will owe U.S. Steel a $565 million break fee if it is not completed.
Still, some analysts think the failure of the deal could boost shares in Nippon Steel.
"Even if the deal does not proceed, Nippon Steel's earnings outlook remains unchanged, with significant growth expected in the next financial year starting in April," Yuji Matsumoto, an analyst at Nomura Securities said in a note.
"Additionally, the removal of financing uncertainty related to the acquisition is likely to support a near-term increase in the stock price," he said.
POTENTIAL LEGAL ACTION
Japan is the biggest investor into the U.S. economy and some business leaders and officials have voiced a concern that the deal's failure may cool down investment flow from the country.
Prime Minister Shigeru Ishiba said on Monday that he viewed Biden's decision as a "grave matter" that has led to concerns among Japanese businesses over the future of bilateral investment.
"We will strongly request the U.S. government to dash such concerns," he said. "Although (the U.S.) is an allied nation, for the future of our relations, we must insist on an explanation as to why there are security concerns."
The government has already conveyed its position to the Biden administration and will consider concrete support measures for Nippon Steel based on the company's response to the decision, Japanese industry minister Yoji Muto said on Monday.
Keidanren, the Japanese business lobby, echoed the government's response, adding Biden's decision to block the deal was "extremely disappointing".
"Despite the fact that Japan is the U.S.'s largest investor and ally, the decision, which was made on the grounds of economic security, is a cause for concern about the impact on future investment in the U.S. and on Japan-U.S. economic relations," the organisation said in a statement.
For both companies, the path forward is unclear.
Nippon Steel and U.S. Steel could sue the U.S. government, another buyer could swoop in for U.S. Steel, or Republicans who favour the deal could urge President-elect Donald Trump to find a way to approve it.
But some lawyers and consultants have said a legal challenge would be tough.
"Even if Nippon Steel is somehow able to resuscitate the deal, it faces a similarly dire prognosis from Trump. He would probably move quickly to kill it," said David Boling, a director at consultants Eurasia Group.
On Monday, Nippon Steel President Tadashi Imai told reporters filing a lawsuit against the U.S. government is one of the "important options", Nippon Television reported.
Imai said that the U.S. government's reviewing process and the decisions over its acquisition proposal did not seem properly handled, adding Nippon Steel is "entitled to a proper review," according to the report.
Imai said that it would not take long for the company to announce countermeasures to the U.S. government's decision, the report said.
($1 = 157.6300 yen)
(Reporting by Mariko Katsumura, Noriyuki Hirata, Yuka Obayashi, Katya Golubkova and Chang-Ran Kim; Editing by Jamie Freed and Christian Schmollinger, Kirsten Donovan)
Nippon, US Steel file suit after Biden administration blocks $15 billion deal
Mon, January 6, 2025
WASHINGTON (AP) — Nippon Steel and U.S. Steel are filing a federal lawsuit challenging the Biden administration's decision to block a proposed nearly $15 billion deal for Nippon to acquire Pittsburgh-based U.S. Steel..
The suit, filed Monday in the U.S. Court of Appeals for the District of Columbia, alleges that it was a political decision and violated the companies' due process.
Nippon Steel had promised to invest $2.7 billion in U.S. Steel’s aging blast furnace operations in Gary, Indiana, and Pennsylvania’s Mon Valley. It also vowed not to reduce production capacity in the United States over the next decade without first getting U.S. government approval.
Biden on Friday decided to stop the Nippon takeover — after federal regulators deadlocked on whether to approve it — because “a strong domestically owned and operated steel industry represents an essential national security priority. ... Without domestic steel production and domestic steel workers, our nation is less strong and less secure," he said in a statement
While administration officials have said the move is unrelated to Japan's relationship with the U.S. — this is the first time a U.S. president has blocked a merger between a U.S. and Japanese firm.
Biden departs the White House in just a few weeks.
The president's decision to block the deal comes after the Committee on Foreign Investment in the United States, known as CFIUS, failed to reach consensus on the possible national security risks of the deal last month, and sent a long-awaited report on the merger to Biden. He had 15 days to reach a final decision.
Fatima Hussein, The Associated Press
WASHINGTON (AP) — Nippon Steel and U.S. Steel are filing a federal lawsuit challenging the Biden administration's decision to block a proposed nearly $15 billion deal for Nippon to acquire Pittsburgh-based U.S. Steel..
The suit, filed Monday in the U.S. Court of Appeals for the District of Columbia, alleges that it was a political decision and violated the companies' due process.
Nippon Steel had promised to invest $2.7 billion in U.S. Steel’s aging blast furnace operations in Gary, Indiana, and Pennsylvania’s Mon Valley. It also vowed not to reduce production capacity in the United States over the next decade without first getting U.S. government approval.
Biden on Friday decided to stop the Nippon takeover — after federal regulators deadlocked on whether to approve it — because “a strong domestically owned and operated steel industry represents an essential national security priority. ... Without domestic steel production and domestic steel workers, our nation is less strong and less secure," he said in a statement
While administration officials have said the move is unrelated to Japan's relationship with the U.S. — this is the first time a U.S. president has blocked a merger between a U.S. and Japanese firm.
Biden departs the White House in just a few weeks.
The president's decision to block the deal comes after the Committee on Foreign Investment in the United States, known as CFIUS, failed to reach consensus on the possible national security risks of the deal last month, and sent a long-awaited report on the merger to Biden. He had 15 days to reach a final decision.
Fatima Hussein, The Associated Press
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