On May 26, U.S. President Donald Trump expressed support for Nippon Steel’s $14.9 billion bid for U.S. Steel, a move that has drawn attention to the details and potential implications of the deal. While the announcement generated interest, Nippon Steel’s shares saw only modest gains on Monday as investors weighed the possible costs and scope of the acquisition.
As part of the deal announced on May 23, Trump said in a post on Truth Social that the “planned partnership” between the two companies will create at least 70,000 jobs and add $14 billion to the U.S. economy, and then said on Sunday that the United States will have control over U.S. Steel as part of the partnership.
It is still unclear whether “partnership” refers to the full acquisition of U.S. Steel that Nippon Steel has been pursuing. The White House did not respond to questions about the announcement on Friday.
Speaking at a media briefing on May 26 Japan’s Chief Cabinet Secretary Yoshimasa Hayashi said the government will make efforts to facilitate communication among the relevant parties regarding Nippon Steel’s bid.
Shares of Nippon, the world’s fourth-largest steelmaker, rose as much as 7.4 percent to 3,081 yen ($21.55) in Tokyo, but then erased a chunk of the gains to be up 1.7 percent by mid-afternoon trade.
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A merger would create the world’s third-largest steel producer by volume, after China’s Baowu Steel Group and Luxembourg-based ArcelorMittal, according to World Steel Association data.
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National security panel divided
Last week, a national security panel was divided in its recommendation to President Donald Trump on Nippon Steel’s bid for U.S. Steel but most panel members believe any security risks posed by the deal can be addressed, a White House official said.
The Committee on Foreign Investment in the U.S. on Wednesday submitted a recommendation to Trump about the national security implications of the merger, as directed by Trump in an executive order signed last month, Reuters reported.
But key details had not emerged until now about the contents of the document, submitted after Japan’s Nippon Steel supercharged its pledged investment in U.S. Steel to $14 billion in a last-ditch bid for approval, as reported by Reuters.
“We’ve received the report and the President will review the recommendations of each agency to determine if additional action on this matter is necessary,” the White House official said in a statement. “CFIUS agencies were not unanimous in their recommendation, but the majority believe any risks can likely be addressed through mitigation,” the person added, declining to be named because the matter was not public.
Talks with the U.S. government about the merger are in the final stages, Nippon Steel’s president Tadashi Imai told reporters in Tokyo, declining to provide details but saying the company is awaiting Trump’s decision.
“Through our investment and the transfer of the latest technology, U.S. Steel will be able to maintain its competitiveness in the medium to long term. I hope Trump will approve this deal,” Imai said.
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15 days to decide
The recommendation complies with an executive order signed by Trump last month, which tasked CFIUS with outlining whether any measures proposed by the companies assuage the national security risks previously identified by the committee.
The April directive also asked for a statement describing the position of each agency that is a member of CFIUS as well as the reasons behind it.
Trump will now have 15 days to decide the fate of the transaction, although the timeline could slip.
Following a previous CFIUS-led review, former President Joe Biden blocked the deal in January on national security grounds.
The companies sued, arguing they did not receive a fair review process. The Biden White House rejected that view.
Reuters reported this week that if the merger is approved, Nippon Steel has said it would invest $14 billion into U.S. Steel’s operations including up to $4 billion in a new steel mill.
Reuters contributed to this report
