Washington, May 24 (HS): Donald Trump has expressed support for a partnership between US Steel and Nippon Steel, deviating from his earlier stance against Nippon’s $14.9 billion bid for the American company. While his recent announcement on social media does not fully endorse the takeover, he highlighted that US Steel would retain its headquarters in Pittsburgh. Trump’s predecessor, Joe Biden, had blocked Nippon’s acquisition due to national security concerns during his last weeks in office, prompting a review of the proposal under the Trump administration.
In Trump’s announcement, he claimed that this partnership would create at least 70,000 jobs and inject $14 billion into the U.S. economy, with most of this investment expected to occur within the next 14 months. Following this news, shares of US Steel surged by 21%, as investors took Trump’s remarks to imply that Nippon Steel had his backing, potentially clearing a significant obstacle for the takeover.
The stock price of US Steel continued to rise during after-hours trading, nearing Nippon Steel’s offer price of $55 per share, with investors anticipating that terms would resemble those proposed in 2023. Some analysts predict that US Steel may eventually become privately held, allowing current shareholders to receive cash payouts for their stakes. Trump also announced plans to hold a rally at a US Steel facility in Pittsburgh next Friday to further emphasize his support for the company’s future. Meanwhile, Nippon Steel welcomed Trump’s decision regarding the partnership, while the White House has yet to respond to inquiries about the announcement.
This week, Reuters reported that Nippon Steel plans to invest $14 billion into US Steel’s operations if their merger is approved, which includes up to $4 billion for a new steel mill. This merger has generated significant interest on Wall Street, transitioning into the political realm amid fears of foreign ownership leading to job losses in Pennsylvania, home to US Steel. The issue influenced last year’s election that saw Donald Trump returned to the White House.
Pennsylvania Senator Dave McCormick lauded the deal as a “partnership” and a “huge victory for America,” asserting it would protect over 11,000 jobs in Pennsylvania and create at least 14,000 additional positions. In contrast, the United Steelworkers union has urged the president to reject Nippon’s proposal, criticizing it as “flashy promises” aimed at undermining domestic industry.
Trump’s stance on Nippon’s bid has notably changed. In December, he firmly opposed the deal, stating, “As President, I will block this deal.” However, by last month, he had softened his tone, expressing a desire for US Steel to remain in the U.S. and not be sold to Japan.
For investors, including major hedge funds, this news offers relief after over a year of anticipation for a resolution. One investor mentioned, “There were huge high-fives all around today,” noting their understanding of Trump’s sentiments played a role in their strategy. Investors feel that Trump’s push for increased investment commitments has benefitted them. Ultimately, one investor remarked, “This deal ensures that steelmaking will live on in Pittsburgh for generations.”
Hindusthan Samachar / Jun Sarkar
