Nippon Steel shares soar 11% on Trump review of US Steel takeover

TOKYO – Nippon Steel shares soared 11 per cent on April 8 after US President Donald Trump launched a review of the company’s

US$14.1 billion (S$19 billion) bid

to take over United States Steel Corp.

The merger had previously been blocked by Mr Trump’s predecessor, Mr Joe Biden, on national security grounds. On April 7, shares in US Steel rallied 16 per cent in New York on the news.

In a presidential memorandum released by the White House on April 7, Mr Trump said the purpose of the review is to assist him “in determining whether further action in this matter may be appropriate” and directed the Committee on Foreign Investment in the United States to submit a recommendation to him within 45 days.

The memorandum said the recommendation needs to describe whether any measures proposed by the Japanese and US steelmakers are “sufficient to mitigate any national security risks” previously identified by the committee.

The document addressed to the committee’s current members, including Commerce Secretary Howard Lutnick and Secretary of State Marco Rubio, said the review will be carried out anew.

The development, which could break the stalemate over the buyout plan, came after Nippon Steel vice-chairman Takahiro Mori held talks with Mr Lutnick last week, during which he promised to increase the Japanese company’s investment in US Steel facilities.

In early January, Mr Biden issued an order to block the sale of US Steel to the Japanese firm on national security grounds, following a recommendation by the panel also known as CFIUS.

Nippon Steel and US Steel, which announced their merger plan in December 2023, filed a lawsuit after Mr Biden’s decision, arguing that the CFIUS screening and recommendation were influenced by the Democratic president.

In mid-March, a US Steel filing with the Securities and Exchange Commission showed that the Justice Department had asked a Washington court to provide more time for the government to complete its ongoing discussions with the two steelmakers.

It said the two companies had consented to the department’s motion aimed at eliminating the need for the court to resolve the litigation, with oral arguments that were due to begin April 24 pushed back to the week of May 12.

In the months leading up to the 2024 presidential election, Mr Biden had aligned with the leadership of the powerful United Steelworkers union to voice opposition to the sale of the iconic but struggling US producer, which is headquartered in Pennsylvania, a key battleground state in the race to the White House.

The Republican Trump, who won the Nov 5 election, was also against the sale. He has since said that Nippon Steel acquiring a minority stake in US Steel would not cause any issues, but a foreign company owning it would not be good psychologically.

During a joint press conference with Japanese Prime Minister Shigeru Ishiba in February following their meeting in Washington, Mr Trump said Nippon Steel would “invest heavily” in US Steel, instead of seeking to fully own it.

But Nippon Steel, the world’s fourth-largest producer, and US Steel have not given up on their plan to merge.

Before Mr Biden blocked Nippon Steel’s buyout attempt, US Steel and its shareholders were supportive of the idea, which would create the world’s third-largest steelmaker by volume, as a way to become more competitive globally.

At the joint press conference, Mr Trump said he would “mediate” a deal between the US and Japanese companies.

“I didn’t want it purchased, but investment I love,” he said at the time, and later started claiming that his administration’s new 25 per cent tariffs on all steel and aluminum imports would revive an American company like US Steel. KYODO NEWS, AFP