Trump approves $14.9 billion takeover of US Steel by Japan’s Nippon Steel

On June 14, US President Donald Trump approved the purchase of US Steel by Japanese steelmaker Nippon Steel for $14.9 billion. This is stated in the relevant executive order posted on the White House website.

As stated in the document, the merger may be extended if the companies sign a national security agreement with the Department of the Treasury or any other relevant CFIUS (Committee on Foreign Investment in the United States) member agencies.

In a joint statement, the companies said they had entered into a national security agreement with the US government. The document provides for investments of approximately $11 billion by 2028 and includes commitments related to management (in particular, a “golden share” for the US government), domestic production, and trade issues.

Nippon Steel will acquire 100% of US Steel’s shares, a spokesperson for the Japanese company said on June 15. The steelmakers, according to Reuters, did not provide any details about the “golden share,” raising questions about the extent of US control. Senator David McCormick of Pennsylvania, where US Steel is headquartered, said in May that the “golden share” would give the government veto power over key decisions affecting US Steel.

Trump’s approval caps 18 months of efforts by the companies amid union resistance and two national security reviews.

For Nippon Steel, the world’s fourth-largest steelmaker, securing a foothold in the US is key to its global growth strategy. The US steel market, including high-quality steel, which is the Japanese company’s specialty, is growing amid global trade tensions. The deal will increase Nippon Steel’s annual production capacity to 86 million tons from the current 63 million tons.

Nippon Steel shareholders are currently weighing the benefits of the acquisition, Bloomberg notes, including access to a new market for its high-quality specialty steel, against the costs, including financing plans and potential dilution of shares.

For investors in the Japanese company, the key concern in the short term will be both the acquisition itself and the promised investments, which have grown significantly over months of negotiations and now range from commitments to upgrade existing assets to a new steel mill. In particular, Ryunosuke Shibata, an analyst at SBI Securities Co, believes that Nippon should issue new shares. He added that the company may seek to raise up to 1 trillion yen ($6.9 billion) in the capital markets.

As a reminder, Nippon Steel plans to invest nearly 870 billion yen ($6.05 billion) in the introduction of electric arc furnaces at its three plants in Japan to reduce carbon emissions. Part of the funding will come from the country’s government.