Nippon Wins Conditional Approval to Buy US Steel
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Nippon Steel Corp. won conditional U.S. approval for its $14.1 billion purchase of United States Steel Corp., capping a lengthy saga in a tie-up that will create one of the world’s largest steel companies.
In a release June 13, the companies said they’ve committed to a national security agreement proposed by the Trump administration, which earlier cleared the deal subject to those terms.
As part of the $55-per-share deal, the Japanese company will invest an additional $11 billion by 2028, including an initial commitment in a greenfield project that would be completed after 2028. Nippon had previously raised its pledged additional investment in an effort to win President Donald Trump’s approval.
Nippon Steel will also spend an extra $3 billion after 2028 for a new steel mill, according to people familiar with the matter. That would push the total additional investment — on top of the purchase price — to $14 billion.
We are thrilled that / has approved U. S. Steel’s historic partnership with Nippon Steel, which will unleash unprecedented investment in steelmaking in the United States, protecting and creating more than 100,000 jobs. Read more: — U. S. Steel (@U_S_Steel)
Earlier June 13, Trump formally opened the door to approving the sale of U.S. Steel by submitting the agreement to the companies and amending former President Joe Biden’s move to block the agreement in an executive order.
The president’s action cleared the sale so long as the companies comply with the government’s terms.
“President Trump promised to protect American steel and American Jobs — and he has delivered on that promise,” White House spokesman Kush Desai said in a written statement. “Today’s executive order ensures U.S. Steel will remain in the great commonwealth of Pennsylvania, and be safeguarded as a critical element of America’s national and economic security.”
Nippon Steel and U.S. Steel in the release said they had received regulatory approvals and that “the partnership is expected to be finalized promptly.” The deal is expected to close by June 18, the merger agreement deadline, Japan’s Nikkei reported on June 15, without saying where it got the information.
U.S. Steel shares rally as Trump approves Nippon takeover with unique government 'golden share' — CNBC (@CNBC)
Trump earlier had said the U.S. would receive a so-called golden share in the post-transaction company, though it’s not clear what that would entail. The companies confirmed that the U.S. would get a golden share but didn’t elaborate.
An entity — in this case, the U.S. government — that holds a golden share means it has veto power over certain changes the companies might want to make.
Commerce Secretary Howard Lutnick said in a social post on June 16 that the U.S. golden share gives it the option to, among other things, prevent Nippon Steel from moving the company out of Pittsburgh, change the name of U.S. Steel or close plants in the U.S. without U.S. government consent.
The terms of the security agreement also include significant and unprecedented U.S. control measures, as well as certain control over some board seats and requirements that some leadership roles go to American citizens, according to a person familiar with the pact, speaking on condition of anonymity. The golden share does not include an equity stake in the company, the person said.
“The Japanese government believes that this investment will strengthen the ability of the Japanese and U.S. steel industries to generate new innovation and lead to the strengthening of the close partnership between Japan and the U.S.,” Japan’s Minister of Economy, Trade and Industry, Yoji Muto, said in a written statement. “We welcome the decision of the U.S. government.”
Trump at the U.S. Steel Irvin Works facility in West Mifflin, Pa., on May 30. (Rebecca Droke/Bloomberg News)
Trump and Biden as well as former Vice President Kamala Harris campaigned against the deal, before the former president blocked it in January. Trump has since reversed his position, insisting that the agreement would preserve steel jobs in the U.S.
The text of the security agreement hasn’t been released. Trump and others have previously announced other elements of the deal, including bonuses to steelworkers, a requirement to keep existing blast furnaces running for a decade, and government veto power to retain control over the board of the U.S. Steel subsidiary.
Trump has also hailed the accord as vindication of his trade policies, which have seen the administration levy tariffs in a bid to pressure companies to shift more manufacturing to the U.S. Japan has been engaging in negotiations with the U.S. over trade in a bid to avoid higher levies Trump has threatened. Trump’s decision to champion Nippon Steel’s bid offers to provide fresh momentum for those talks.
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Trump held a rally in Pennsylvania two weeks ago, at U.S. Steel’s iconic Mon Valley facility, celebrating the deal with a crowd of steelworkers, even though it had not yet been finalized.
Trump also used that event to announce he was doubling his tariffs on steel and aluminum, raising them to 50% from 25%.
Since that rally, government officials, company executives and deal advisers worked to hammer out the finer details and get the final signatures.
The deal creates a combined company that will be the world’s second-largest steelmaker. It will become a formidable domestic competitor to Nucor Corp., which for a generation has dominated the American steel industry. The acquisition also clears the way for enhanced steelmaking in areas the U.S. has lagged in recent years, including the type of steel critical to bolster ailing electric grids across the country.
The Japanese steelmaker’s takeover became a political lightning rod after the leadership of the United Steelworkers — based, like U.S. Steel itself, in Pittsburgh — staunchly opposed the tie-up. Biden sided with them, as did Trump. The deal has taken a winding path with extensions, a Biden block, a legal fight, and then Trump’s decision to re-examine it before ultimately clearing it.
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Nippon Steel and U.S. Steel have steadily tried to address worries, with Vice Chairman Takahiro Mori making repeated visits to the U.S. to clinch the deal.
Divisions within the union were laid bare through the process, with local union leaders expressing support for the deal and breaking with their national leadership.
Trump’s reversal was a few months in the making. In February, he surprised the parties by blessing some kind of a minority stake — an announcement they hadn’t been privy to and didn’t understand. The deal, then and now, was built on Nippon Steel buying U.S. Steel entirely. The question was mitigation measures.
The president said he supported a “planned partnership” between the companies on May 23, without providing details of an announcement that appeared to bless the original deal with additional mitigation measures.
