President Trump’s recent comments in support of Nippon Steel’s $14.9 billion bid for U.S. Steel have sparked speculation and questions regarding the scope of the deal and its potential costs for the Japanese firm. This has led to only muted gains for Nippon Steel’s shares on Monday, as investors wait for more clarity on the situation.
In a post on his social media platform, Truth Social, President Trump announced the “planned partnership” between Nippon Steel and U.S. Steel, claiming that it would create at least 70,000 jobs and add $14 billion to the U.S. economy. He also mentioned that a significant portion of this investment would take place within the next 14 months and even hinted at holding a rally at the U.S. Steel plant in Pittsburgh on Friday.
However, there is still some confusion surrounding the nature of this “partnership” and whether it involves the full acquisition of U.S. Steel by Nippon Steel. The White House has yet to provide any clarification on this matter, despite being asked about it on Friday.
Following Trump’s comments, U.S. Steel shares saw a 21% surge on Friday, reaching $52.01. This was largely interpreted by investors as a sign that Nippon Steel had finally received approval for its long-awaited takeover of U.S. Steel, with Trump’s initial opposition to the deal seemingly overturned. Nonetheless, the shares still remain below the $55 per share offered by Nippon Steel, indicating lingering uncertainty surrounding the potential deal.
Both U.S. Steel and Nippon Steel have expressed their satisfaction with Trump’s statements, with Nippon Steel viewing the deal as a crucial aspect of its global expansion strategy. The acquisition would significantly increase Nippon Steel’s production capacity from 63 million metric tons to 86 million metric tons, at a time when domestic demand in Japan is on the decline.
While the prospect of gaining access to the growing U.S. market is promising for Nippon Steel, some analysts have raised concerns about the costs associated with such a deal. Hiroyasu Mori, the head of the investment information office at Okachi Securities, highlighted the potential increase in spending as a cause for worry.
If the merger goes through, it would create the world’s third-largest steel producer by volume, trailing behind China’s Baowu Steel Group and Luxembourg-based ArcelorMittal, according to data from the World Steel Association. This could potentially reshape the global steel industry landscape and position Nippon Steel as a key player in the market.
