Eiji Hashimoto, chairman and chief executive officer of Nippon Steel Corp., discusses lawsuits filed over the U.S. decision to block the company’s acquisition of U.S. Steel at a news conference in Tokyo on Jan. 7. (Video taken by Minako Yoshimoto)

Photo/Illutration Eiji Hashimoto, chairman and chief executive officer of Nippon Steel Corp., speaks at a news conference on Jan. 7. (Naoko Kawamura)

Nippon Steel Corp. accused U.S. President Joe Biden of giving into powerful lobbying forces and unlawfully blocking its proposed acquisition of U.S. Steel for political purposes a day after filing a lawsuit to overturn his decision.

“The presidential order was issued after CFIUS failed to appropriately conduct its review process due to President Biden’s illegal political interference,” Eiji Hashimoto, chairman and chief executive officer of Nippon Steel, said on Jan. 7, referring to a U.S. national security review. “It is totally unacceptable.”

Japan’s leading steelmaker aims to expand its U.S. operations through the $14 billion (2 trillion yen) purchase of U.S. Steel as a pillar of its growth strategy.

“(The lawsuit) may be time-consuming but it is the best way to proceed,” Hashimoto told a news conference held at Nippon Steel’s headquarters in Tokyo. 

“We will never give up on our bid. We have neither reason nor need to give up.”

CFIUS, a government interagency panel formally called the Committee on Foreign Investment in the United States, reviewed the proposed buyout for national security implications.

But the committee failed to reach a consensus and passed the decision to the U.S. president.

Biden issued an order to block the deal on Jan. 3, saying that Nippon Steel “might take action that threatens to impair the national security of the United States.”

In a lawsuit filed with a federal appeals court on Jan. 6, Nippon Steel and U.S. Steel argued that Biden abused the review system to win support from the United Steelworkers (USW), a trade union opposed to the acquisition, during the presidential election last year.

The two companies filed a separate lawsuit with a federal district court against U.S. steelmaker Cleveland-Cliffs Inc., its chief executive officer and the USW president, saying they unlawfully subverted Nippon Steel’s bid for U.S. Steel.

Hashimoto said Cleveland-Cliffs, a larger rival of U.S. Steel, is determined to bar Nippon Steel from entering the U.S. market “at any cost” to maintain its position.

“It is completely inexplicable, but Cleveland-Cliffs’ CEO collaborated with the USW president and lobbied President Biden by leveraging the union’s powerful political clout,” he said.

Hashimoto emphasized that the litigants have a good chance of winning the lawsuits.

“We are convinced that the facts presented in the lawsuits represent clear violations of the Constitution or other laws and regulations,” he said.

If Nippon Steel wins the case against the presidential order, the proposed acquisition will be reviewed under the incoming administration of Donald Trump, who has also declared his opposition to the deal.

Hashimoto said the president-elect has promised a good life and bright future for American workers by re-energizing the manufacturing industry.

“Nippon Steel’s plan is in line with (Trump’s) intent,” he said. “We will be able to gain his understanding by thoroughly explaining that point.”

Nippon Steel may have to pay about $565 million (90 billion yen) in breach-of-contract penalties to U.S. Steel if the deal falls through.

Hashimoto downplayed that possibility, however.

“We will be required to pay the penalty if our merger contract expires without the bid being closed,” he said. “At present, our company and U.S. Steel are united in our resolve to carry through the deal. The contract will not end as long as we remain as we are.”

(This article was written by Seisaku Yamamoto and Shiki Iwasawa.)

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