Trump approves Nippon Steel's $19b purchase of US Steel, Money News

AsiaOne

14 hours ago

US President Donald Trump approved Nippon Steel's US$14.9 billion (S$19 billion) bid for US Steel on Friday (June 13), capping a tumultuous 18-month effort by the companies that survived union opposition and two national security reviews.
Trump signed an executive order saying the tie-up could move forward if the companies sign an agreement with the Treasury Department resolving national security concerns posed by the deal. The companies then announced they had signed the agreement, fulfilling the conditions of Trump's directive and effectively garnering approval for the merger.
"We look forward to putting our commitments into action to make American steelmaking and manufacturing great again," the companies said in the statement, thanking Trump.
They added the agreement includes US$11 billion in new investments to be made by 2028 as well as governance, production and trade commitments. Nippon Steel will buy a 100 per cent stake in US Steel, a spokesperson for the Japanese company in Tokyo said on Saturday.
The steelmakers provided no detail on the "golden share" they pledged to issue to the US government, raising questions about the extent of US control. US Senator David McCormick of Pennsylvania, where US Steel is headquartered, said last month the golden share would give the government veto power over key decisions relating to the American steel icon.
Reuters has reported that Nippon Steel would invest an additional US$3 billion for a new mill after 2028.
The takeover will set up the ailing US firm to receive the critical investment, allowing Nippon Steel to capitalise on a host of American infrastructure projects while its foreign competitors face steel tariffs of 50 per cent. The Japanese firm also avoids the US$565 million in breakup fees it would have had to pay if the companies had failed to secure approvals.
For Nippon Steel, the world's fourth-biggest steelmaker, securing a foothold in the US is key to its global growth strategy. The US steel market, including high-grade steel, Nippon Steel's specialty, is growing amid rising global trade tensions. 'Great partner'
Still, some Nippon Steel investors are concerned about short-term financial pressure due to the scale of the additional investment commitment.
The Japanese government, rushing to try to secure a trade deal with the US by the time Trump and Prime Minister Shigeru Ishiba meet at the Group of Seven summit starting on Sunday, applauded the Nippon-US Steel agreement.
"The government of Japan welcomes the US government's decision, as we believe this investment will enhance innovation capabilities in the US and Japanese steel industries and further strengthen the close partnership between our two countries," Economy, Trade and Industry Minister Yoji Muto said in a statement on Saturday.
Friday's announcement was hardly guaranteed, even if many investors had seen approval as likely after Trump headlined a rally on May 30 giving his vague blessing to an "investment" by Nippon Steel, which he described as a "great partner."
Shares of US Steel had dipped earlier on Friday after a Nippon Steel executive told Japan's Nikkei newspaper that the takeover required "a degree of management freedom" to go ahead after Trump said the US would be in control with the golden share.
The bid has faced opposition since Nippon Steel launched it in December 2023.
After the United Steelworkers union came out against the deal last year, both then-President Joe Biden, a Democrat, and Trump, a Republican, expressed their opposition as they sought to woo voters in the presidential campaign in the swing state of Pennsylvania.
Shortly before leaving office in January, Biden blocked the deal on national security grounds, prompting lawsuits by the companies, which argued the national security review they received was biased. The Biden White House disputed the charge.
The steel companies saw a new opportunity in the Trump administration, which opened a fresh 45-day national security review into the proposed merger in April.
But Trump's public comments, ranging from welcoming a simple "investment" in US Steel by the Japanese firm to floating a minority stake for Nippon Steel, spurred confusion.
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