Posted on 06 Jan 2025
US Steel (USS) and Nippon Steel plan to pursue legal actions in an attempt to follow through on their merger agreement that was formally blocked by US President Joe Biden on Friday (see separate story), Kallanish reports.
In a joint statement, the two companies accuse the Committee on Foreign Investment in the US (CFIUS) and the Biden of being driven by political agendas.
“We are dismayed by President Biden’s decision to block Nippon Steel’s acquisition of USS, which reflects a clear violation of due process and the law governing the Committee on Foreign Investment in the US (CFIUS). Instead of abiding by the law, the process was manipulated to advance President Biden’s political agenda," the companies' statement says. "The president’s statement and order do not present any credible evidence of a national security issue, making clear that this was a political decision."
USS/Nippon say they have made concessions to assuage national security concerns presented throughout the review processes (see Kallanish passim). The Japan- and Pittsburgh, Pennsylvania-based steelmakers say those mitigation efforts were never fairly assessed because US decision-makers are driven by political ideology, not laws.
“To proactively address any concerns that could be raised by CFIUS, Nippon Steel voluntarily committed to various mitigation measures that would be fully enforceable by the U.S. government, including: having a majority of the go forward board of directors of US Steel be composed of US citizens; having three independent directors who CFIUS will approve; ensuring that key positions such as ceo and cfo will be US citizens; removing any Nippon Steel involvement in trade measures proposed by US Steel; prohibiting the transfer of any production and jobs outside the US; guaranteeing that production capacity at US Steel’s facilities in Pennsylvania, Arkansas, Alabama, Indiana and Texas would not be reduced for ten years without approval from CFIUS; regularly reporting to CFIUS on the status of compliance with the national security agreement; and allowing CFIUS to send an observer to the board of directors," their new statement summarises.
"However, CFIUS did not give due consideration to a single mitigation proposal offered by the parties, as evidenced by the absence of any written feedback to the four robust national security agreements that the parties proactively offered over 100 days,” the companies say further.
USS and Nippon say that the review process was never fair for the companies because Biden had his thumb on the scale from the onset of the deal when it was proposed in December 2023.
“It is clear that the CFIUS process was deeply corrupted by politics, and the outcome was pre-determined, without an investigation on the merits, but to satisfy the political objectives of the Biden White House,” the companies contend.
They add: “We are left with no choice but to take all appropriate action to protect our legal rights. We are committed to taking all appropriate action to protect our legal rights to allow us to deliver the agreed upon value of $55.00 per share for US Steel’s stockholders upon closing.”
Source:Kallanish
