Trump gives formal blessing to Nippon Steel’s US$19 billion bid for US Steel

US President Donald Trump formally approved

Nippon Steel’s fraught US$14.9 billion (S$19 billion) bid for US Steel

on June 13, capping a tumultuous 18-month effort by the companies, beset by union opposition and two national security reviews.

He signed an executive order saying the tie-up could move forward if the companies signed 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 Mr 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 Mr 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 June 14.

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 previously reported that Nippon would invest an additional US$3 billion for a new mill after 2028.

The takeover will set up the ailing American steel icon to receive the critical investment, and allow Nippon Steel to capitalise on a host of American infrastructure projects, as its foreign competitors face steel tariffs of 50 per cent. It also absolves the Japanese firm of paying US$565 million in break-up fees if the companies 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.

‘A 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 Mr Trump and Prime Minister Shigeru Ishiba meet at the Group of Seven summit starting on June 15, 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 U.S. 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 June 14.

While many investors saw approval as likely after Mr Trump headlined a rally on May 30 giving his vague blessing to an “investment” by Nippon Steel, which he described as a “great partner”, the June 13 announcement was hardly guaranteed.

Shares of US Steel had dipped earlier in the day after a Nippon Steel executive told the Japanese Nikkei newspaper that its planned takeover of US Steel required “a degree of management freedom” to go ahead after Mr Trump earlier had said the US would be in control with a golden share.

The bid, first announced by Nippon Steel in December 2023, has faced opposition from the start. Both Democratic former president Joe Biden and Mr Trump, a Republican, asserted last year that US Steel should remain US-owned, as they sought to woo voters ahead of the presidential election in Pennsylvania, where the company is headquartered.

In January, Mr Biden, shortly before leaving office, 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 began on Jan 20 and opened a fresh 45-day national security review into the proposed merger in April.

But Mr 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. REUTERS