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Japanese company and target US Steel have also sued the Biden administration and rival Cleveland-Cliffs

Nippon Steel and US Steel are betting Donald Trump can be persuaded to back their $15bn deal, accusing President Joe Biden of blocking the transaction to win union support in last year’s presidential election.

The two companies, which have battled opposition to the deal for more than a year, are banking that lawsuits they filed this week against Biden will compel his successor to endorse the deal when he returns to the White House this month.

One person familiar with the litigation strategy said Tokyo-based Nippon, which proposed the acquisition of US Steel in the middle of the 2024 presidential race, is hoping Trump’s instincts to undo Biden’s policies will trigger the reversal. Trump announced his opposition to the deal during the campaign.

“You could see a scenario where president Trump doesn’t want to defend the corrupt practices of his predecessor,” the person said. “In that scenario, this deal shouldn’t even end up on the president’s desk.”

Biden cited national security as he blocked the deal last Friday, fulfilling a vow made this year to stop the 123-year-old iconic rust-belt employer falling into the hands of a foreign company.

The president’s decision followed an inconclusive review of the deal by the Committee on Foreign Investment in the US, the government panel tasked with vetting transactions for national security concerns.

“The process has been corrupt,” US Steel chief executive David Burritt said in an interview with CNBC on Tuesday. “God knows this process has been tainted from the very beginning and we need to fix it. This should not have happened.”

The companies were now trying to “right the wrongs of this president and make sure that Cfius is actually followed”, Burritt added.

In one lawsuit filed on Monday, the companies accused the Biden administration of blocking the deal to serve the president’s “personal political agenda”.

The suit, filed in a federal appeals court in Washington, also took aim at members of Cfius, including Treasury secretary Janet Yellen and attorney-general Merrick Garland. The suit argues the process was a “sham”.

The National Security Council said Cfius had concluded that the deal would “create risk for American national security”.

“President Biden will never hesitate to protect the security of this nation, its infrastructure, and the resilience of its supply chains,” an NSC spokesperson said. 

A second suit targets rival producer Cleveland-Cliffs, its chief executive Lourenco Goncalves and United Steelworkers union president David McCall, accusing them of “illegal and co-ordinated actions aimed at preventing the transaction”. Cleveland-Cliffs was the runner-up in the 2023 auction for US Steel.

Nippon’s offer to buy the steel producer became a flashpoint during the presidential campaign as Trump and Biden courted blue-collar voters in the crucial swing state of Pennsylvania, where US Steel is based.

The USW has worked to block the deal, even though US Steel warned the transaction’s failure would force it to cut jobs.

Trump on Monday reiterated his opposition to the Nippon Steel takeover. “Why would they want to sell U.S. Steel now when Tariffs will make it a much more profitable and valuable company?” he said on Truth Social, in a reference to his plan to impose tariffs on imports. The president-elect’s team did not immediately respond to a request for more comment on Tuesday.

US Steel is the country’s third-largest player after Nucor and Cleveland-Cliffs and is a key producer for the American energy and transportation sectors, and military. Biden said its sale to Nippon would “create risk for our national security and our critical supply chains”.

Trump has been persuaded to reverse his positions on high-profile commercial issues before, including a recent effort to forestall the US government’s move to block TikTok, the social media platform owned by China-based ByteDance — a ban he supported during his first term.

“There is a world in which this goes back to Trump,” said Stephen Heifetz, a partner at law firm Wilson Sonsini, who previously served on Cfius. Only one other company, Chinese-owned Ralls, has successfully sued Cfius for violating due process. “I would underscore we’re in completely uncharted territory. Anything could happen.”

Aimen Mir, a partner at law firm Freshfields and former Cfius official, said there was very little evidence that Nippon, based in a country that is a treaty ally of the US, posed a national security risk. It is the first time a non-Chinese deal with no military implications has been blocked, he added.

“[Biden’s] decision appears to be premised, at best, on flawed national security arguments and, at worst, on political motivations,” Mir said.

US Steel’s Burritt has warned of lay-offs and mill closures without the $2.7bn investment Nippon has said it will make if the deal goes through.

“The US [steel] industry used to be the top in the world. Now it’s a laggard,” said Todd Tucker, the director of the industrial policy and trade programme at the Roosevelt Institute. The deal’s demise would leave US Steel in “crisis mode”, he added. 

Burritt in November said the company’s earnings had declined year-over-year as steel prices fell, but that the company had “demonstrated resilience in our business model”. The original agreement with Nippon requires the Japanese company to pay a $565mn break-fee if the deal is blocked.

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Skype and Atomico founder believes continent can thrive by developing applications on top of artificial intelligence models

Niklas Zennström, one of Europe’s most successful tech entrepreneurs and investors, believes the continent’s start-ups can still succeed in artificial intelligence despite their huge funding gap with US rivals.

European start-ups can thrive by developing applications that are built on top of AI platforms run by US-based companies such as OpenAI or Google, Zennström told the Financial Times.

“Think what happened with mobile and the cloud: there are a few cloud providers in the world, they enable thousands and thousands of businesses,” he said in an interview. “It’s not like everyone needs to be a large language model . . . You can create value as an application provider.”

The comments from a leading industry voice come as European policymakers and investors grow anxious that the US is pulling ahead of the region in AI.

Many worry that Europe once again risks being left behind by deep-pocketed groups in Silicon Valley in a transformational new technology, with huge implications for the region’s competitiveness and national security.

The European tech industry has created hundreds of “unicorns” — private companies valued at more than $1bn — and narrowed the gap in early-stage funding with the US “regardless of whether Europe has a lot of critical [tech] infrastructure that is European”, the Skype co-founder told the FT.

“European companies can build on top of [AI platforms] whether they are from France or from the US,” he said.

Confidence among Europe’s entrepreneurs in the region’s tech prospects hit a new low in 2024, according to the State of European Tech report by Atomico, the venture firm founded by the Swedish entrepreneur in 2006. Its latest survey found that 40 per cent of founders felt “less optimistic” about the future of European tech than the year before.

Yet while conceding 2024 has been “very hard” for start-ups and investors, with capital invested in European tech expected to fall for a third successive year, Zennström believes pessimism about the region’s prospects is exaggerated.

“It’s a European problem to [just] talk about the problem,” he said. “There is so much exciting data that shows we are actually catching up [with the US], we are doing pretty well.”

Despite that progress in the European tech industry at large, the transatlantic investment gap in AI start-ups in particular is stark.

A report by venture firm Accel, published in October, found that US investment into generative AI reached almost $48bn in 2023 and 2024 combined, more than five times as much as in Europe and Israel, where funding in the sector totalled about $9bn.

Much of the US total is driven by start-ups developing so-called “foundation” models, the costly and complex AI systems underpinning general-purpose chatbots and media creation services, such as OpenAI’s GPT.

Europe has a handful of start-ups working on foundation models, including Paris-based Mistral and Germany’s Black Forest Labs.

However, US-based OpenAI, Anthropic and xAI, have together raised tens of billions of dollars more than their European rivals, while Big Tech groups Microsoft, Google, Amazon and Meta are also investing heavily in their own large language models.

Atomico, which raised $1.24bn in new funds in 2024, has backed European AI start-ups that are building more specialised models around particular applications, including Corti, a Danish maker of digital assistants for healthcare, and Germany’s DeepL, which offers machine translation tools.

“It’s not just all about five LLM companies,” Zennström said. “There’s also so much else that’s being created in terms of value.”

But he admitted the “jury is still out” on whether Europe can build competitive general-purpose LLMs in the long term.

“What you need for AI is, you need a lot of money, you need a lot of data and you need distribution. So it’s a natural thing that the Big Tech companies have a competitive advantage,” Zennström said. “The reality is the rich get richer.”

Several assets were left on the market in 2024.

Last year was a particularly slow one when it came to beauty M&A and at least the first half of 2025 is likely to follow suit.

Though some sources painted a rosier picture for 2025 than others, it seems that leadership changes and broader headwinds for larger conglomerates will keep buyers at bay for the beginning of the year — especially with a handful of brands left on the table from 2024.

“It doesn’t feel like anything’s going to be different in the next six months,” said an industry source, who added that while a few brands may join the mix this year, too many are still on the market from 2024. “They’re waiting to figure out what’s going on with the brands that are in market this year.

“People were saying deals would get done, but nothing got done,” the source continued. “Strategics are concerned about assets that grow super fast at rates over 30 percent. They have to value something and want brands that will be around for 10 to 20 years, and there’s no way to forecast for that.”

In U.S.-based makeup alone, Rare Beauty, Kosas Cosmetics, Glossier, Merit, Jane Iredale and Makeup by Mario were exploring options.

“Strategics are going through a recalibration period in terms of how they look at M&A,” said Ilya Seglin, managing director of Cascadia Capital. “Sponsors are pulling because they don’t know where strategics are going to focus, so they don’t know how to underwrite their exits. Once strategics come back, you’re going to see sponsors come back.”

Sectoral struggles faced by prime buyers, such as challenges in China, Asia travel retail and early signs of a potential softening in the U.S. beauty market, could also hamper activity.

“A lot of the assets in market already have institutional capital invested and want a strategic exit,” the source said. “If you look internally what’s happening at those buyers, they have a fiduciary duty to look at every asset but between issues in China and with travel retail, there’s too much going on internally for them to do any significant M&A.”

Conversely, Seglin posited that leadership changes could indicate the market heating up. Shiseido and the Estée Lauder Cos. began the new year with new chief executive officers, while the likes of Revlon and Unilever’s Prestige division also recently appointed new leaders.

“Those executives are highly incentivized to deliver growth, and they’re going to realize sooner rather than later that a lot of the core brands are not the growth engines they thought they were. So, you have to get growth, and do acquisitions. These people are sophisticated enough to walk and chew gum at the same time,” he said.

“They’re not growing at the rate they need to grow,” said another source of the beauty conglomerates. “They’re not going to do it with their own brands, they need to start acquiring. The way to cover up some of the internal issues is through acquisitions.”

Seglin thinks the sweet spot is between $50 million and $150 million in terms of revenue. “When you get to $200 million, at a healthy multiple, that’s a big check to write,” he said. “Nobody wants to buy a $200 million business and get it to $300 [million]. If you have great [stock keeping units], tight distribution, you can see how to get from $100 million to $500 million. A strategic can take brands global, and they have the infrastructure to do it.”

Outside of the U.S., Unilever is said to be considering the sale of two of its luxury skin care brands — Ren Skincare and Kate Somerville — as part of the consumer giant’s wider efforts to streamline operations, boost profits and deliver more value to shareholders. The group acquired both labels in 2015.

A mixed outlook hasn’t stopped a handful of companies from exploring sales, however.

Industry insiders say British beauty retailer Space NK — aside from its U.S. wholesale division — is up for sale. In June, PCA Companies acquired the U.S. branch of Space NK, which involves about 600 sales points across Bloomingdale’s, Nordstrom, Nordstrom Rack, Hudson’s Bay and the company’s shop-in-shop collaboration with Walmart and Beauty Space NK.

Space NK was founded in London’s Covent Garden by Nicky Kinnaird in 1993 as a high-end destination for niche international brands, many of them skin care, that were difficult to find in the U.K. Sales at Space NK, which is owned by Manzanita Capital, have been increasing by 30 percent annually over the past three years and growing two-and-a-half times faster than the U.K. prestige premium market.

Skin care brand Medik8 is also said to have hired J. P. Morgan to explore deal options. Founded in 2009 by Elliot Isaacs, the skin care brand’s revenues are set to exceed $100 million in 2025. Neither Medik8 nor J. P. Morgan responded to requests for comment by press time.

Swedish influencer makeup brand Caia Cosmetics, launched by Bianco Ingrosso, is said to be on the market, too. She cofounded Caia Cosmetics with business partner Vanessa Linblad and seasoned beauty entrepreneurs Mikael Snabb and Jesper Matsch in 2018. Caia Cosmetics expanded from makeup into hair care, skin care and fragrance. Its sales in 2024 were expected to reach 60 million euros, according to industry sources.

Kayali is another beauty brand being shopped around, sources said. The perfume brand, which means “my imagination” in Arabic, was introduced in late 2018 by beauty mogul Huda Kattan and her sisters Mona and Alya Kattan. They began with four scents meant to be layered, launching them in Huda Beauty’s core retailers, including Sephora, Cult Beauty, Harrods and Selfridges. Today, the brand has more than a dozen product references.

Couvent des Minimes is said to be on the block as well. The natural beauty brand, which was sold to HLD Group and Didier Tabary in 2017, was created in 2004. Named after a convent built in 1613 in the village of Mane, in the south of France, the label specializes in natural cosmetics and fragrances based on medicinal herbs. Couvent des Minimes is mostly sold through selective distribution, such as perfumeries and pharmacies.

Marissa Lepor, partner and head of beauty & personal care at The Sage Group, said: “I think 2024, aside from macro-economic headwinds and it being an election year, which generally makes investors a little more hesitant to close deals, the beauty strategics had significant shifts in their leadership teams, and typically when that happens, they’re not inclined to make large acquisitions. I think there’ll be more activity next year.

“The bar for all categories is high,” she continued. “There have been a lot of amazing companies acquired over the past few years, and what the strategics are looking for is not just great brands, but really brands that add incremental value to their existing portfolio companies, and really that incremental value can be attracting a younger customer. It can be bringing in expertise on a new way of marketing, or reaching new customers. It can be formula and kind of tech-driven, or it can just be like an insanely successful business, but one that really has the potential to be what they’re calling a lifetime brand. And so the bar isn’t just, is it a great business that’s growing and profitable, but really, is this something that’s bringing something new to their portfolio that they don’t already have?”