Nippon Steel closes acquisition of US Steel to end 18-month saga

TOKYO – Nippon Steel has closed its US$14.1 billion (S$18.1 billion) acquisition of United States Steel, bringing an end to a bruising takeover battle that was embroiled in American politics for months until finally

gaining support from US President Donald Trump.

The transaction closes exactly 18 months after the two steelmakers first announced their surprising tie-up, a timeline veteran traders called one of the most unique they have ever witnessed.

The controversial deal weathered two presidential administrations, union opposition, an expensive lobbying campaign and two US security panel reviews.

“This has been an unprecedented situation that got completely politicised – the fact that the union was so vocal, but presidential candidates too? That’s never happened before,” said Wolfe Research analyst Timna Tanners, who has covered the industry for two decades. “Steel was the discussion at people’s kitchen tables, which probably hasn’t happened for a while, but in the end, it happened exactly how it should have.”

Nippon Steel’s US$55-a-share acquisition creates the world’s second-largest steelmaker and turns the combined entity into a formidable competitor within the American steel industry.

The companies struck a conditional deal with the Trump administration on June 13 that saw the Japanese steelmaker agree to invest an additional US$11 billion in the Pittsburgh-based producer, giving them the green light to close a transaction first announced in mid-December 2023.

The biggest winners may have been US Steel investors, who held onto their stock through the roller-coaster ride that saw shares sink as low as US$26.92 at one point – less than half Nippon Steel’s offer.

One top investor was Florida-based hedge fund Pentwater Capital Management, which held more than US$1 billion in stock.

“I’m wearing my US Steel shirt today,” Pentwater Capital’s founder, Mr Matthew Halbower, said in a June 18 interview. “In the end, sanity prevailed.”

Nippon Steel in the end offered enough concessions to Mr Trump that made it nearly impossible for his administration not to approve the combination.

Most eye-opening were promises by the steelmakers to give the US president direct say in a number of decision-making scenarios for the American steelmaker in perpetuity.

Nippon Steel and US Steel struck a National Security Agreement with the US, in which US Steel will issue a so-called golden share to the government.

The golden share gives consent rights to the US president concerning reductions in capital investments, changing US Steel’s name and headquarters, redomiciling outside the US, transferring jobs or production outside the US, acquisitions and decisions to close or idle existing facilities.

Nippon Steel’s concessions and added investments helped clinch Mr Trump’s support of a takeover he opposed even before he became president.

Throughout 2024’s election campaign, Mr Trump had repeatedly said he was against foreign ownership of US Steel – a position he shared with then President Joe Biden.

Mr Biden blocked Nippon Steel’s takeover in early January, arguing that the deal would “place one of America’s largest steel producers under foreign control and create risk for our national security and our critical supply chains”.

His decision came after the case was referred to him by a US security panel review.

As the two steelmakers sought last-ditch efforts to rescue their transaction, the newly elected Mr Trump started showing a willingness for the White House to revisit the transaction.

On April 7, Mr Trump ordered another security review of the potential sale, directing the Committee on Foreign Investment in the United States to file a report within 45 days.

Weeks later, Mr Trump touted a “planned partnership” between the two companies, citing an investment and partial ownership, but under US control.

Nippon Steel, with its biggest foreign purchase to date, is making a bet on a new market for its high-end specialty steel – one that is intended to help the industrial heavyweight diversify away from shrinking demand at home and to help it cope with competition from low-cost Chinese exports.

Leadership of the influential United Steelworkers (USW) union, which represents workers at US Steel plants, opposed the deal from the start.

USW President David McCall held significant influence over Mr Biden’s decision on whether to block the deal, as the then president saw union and blue-collar votes as central to his ability to win the pivotal swing state of Pennsylvania in his re-election campaign.

That power began to wane, however, after Mr Trump won the election, and rank-and-file union members voiced a highly vocal split with leadership in support of the deal.

Mr Trump’s administration listened to those members, including USW Local 2227 vice-president Jason Zugai, who acted as the defacto head of the faction wanting Nippon Steel’s bid approved.

Union leadership remains steadfast in its opposition to the transaction even after its closure, with Mr McCall highlighting the unprecedented presidential control over the company.

“It finally found acceptance by President Donald Trump, who now, through his ‘golden share’, has assumed a startling degree of personal power over a corporation,” Mr McCall said in a statement. “We will continue watching, holding Nippon to its commitments.” BLOOMBERG