United States Steel Corp. (X) has filed suit against the American government after President Joe Biden blocked the company’s takeover by Nippon Steel of Japan (NISTF).
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The two steel producers said in a joint statement that they have filed a lawsuit in the U.S. Court of Appeals for the District of Columbia challenging Biden’s decision to block their planned merger, citing national security concerns.
U.S. Steel and Nippon have also filed a lawsuit against rival U.S. steelmaker Cleveland-Cliffs (CLF), its CEO Lourenco Goncalves, and U.S. Steelworkers union President David McCall for opposing the takeover and urging the American government to block the proposed $15 billion deal.
National Security Concerns
“Both Nippon Steel and U.S. Steel have engaged in good faith with all parties to underscore how the transaction will enhance, not threaten, United States national security,” the companies said in their joint statement. Concerns have been raised that Nippon Steel, which is Japan’s largest steelmaker, could cut the production capacity of U.S. Steel and pose a risk to America’s national security.
To try and win approval for the takeover, Nippon Steel had previously offered the U.S. government the ability to veto any reductions to the company’s steel production. Other concessions put forward by Nippon Steel included keeping U.S. Steel headquartered in Pittsburgh, Pennsylvania, and staffing the board of directors of U.S. Steel with Americans.
The deal won the support of U.S. Steel’s shareholders, who voted in favor of the takeover by Nippon last spring. However, the acquisition has become a political issue in Washington, D.C. X stock has declined 35% in the last 12 months as uncertainty surrounding the company’s takeover intensified.
Is X Stock a Buy?
The stock of U.S. Steel has a consensus Strong Buy rating among five Wall Street analysts. That rating is based on four Buy and one Hold recommendations issued in the past three months. The average price target on X stock of $44 implies 38.80% upside from current levels.
