Nippon Steel remains determined to acquire US Steel, despite former President Donald Trump’s recent statements suggesting the Japanese company had abandoned its plan in favor of a simple investment.
Earlier this month, after a meeting with Japanese Prime Minister Shigeru Ishiba, Trump claimed that Nippon was no longer pursuing a takeover of US Steel but was instead considering an investment. However, no official confirmation of this change has come from either Nippon Steel or US Steel. On Tuesday, Nippon Steel President Tadashi Imai reaffirmed the company’s commitment to the merger and stated that discussions with US government officials would continue.
“Only by making an equity investment can we make a major capital spending decision,” Imai said, as reported by Reuters.
Political and Union Opposition
Despite Nippon Steel’s persistence, Trump has made it clear he will oppose the deal, much like President Joe Biden did before leaving office. Biden had blocked the transaction in his final weeks, citing national security concerns, even though Japan is a key US ally and US Steel has minimal military sales.
“I don’t want US Steel being owned by a foreign country. All they can have is an investment,” Trump reiterated, contradicting his earlier claim that Nippon had already dropped its acquisition plans.
US Steel, once a powerhouse of American industry, has struggled for decades and is no longer among the top two US steel producers. In mid-2023, the company announced it was open to a sale, and by December, it had reached a $14 billion agreement with Nippon Steel, which also pledged significant investments to modernize aging facilities.
However, the deal has faced strong resistance from the United Steelworkers union, representing 11,000 of US Steel’s 14,000 American employees. The union has raised concerns about job security and Nippon’s long-term commitment to unionized mills. Additionally, bipartisan political opposition has grown, with many officials recognizing the deal’s unpopularity among workers, retirees, and voters in the industrial Midwest, where US Steel has a deep historical presence.
US Steel’s Response and Future Uncertainty
Despite political pushback, US Steel remains committed to its agreement with Nippon, standing by the $55 per share offer. In response to Trump’s remarks, the company issued a neutral statement:
“Thank you, President Trump, for your interest in a thriving future for US Steel.”
US Steel, founded in 1901, was once a symbol of American industrial dominance. Its rapid expansion was driven by infrastructure growth, World War II demands, and minimal foreign competition. However, in recent years, it has been overshadowed by competitors, with its current market value around $8.5 billion—less than online pet retailer Chewy.
Challenges from Shareholders
Aside from government opposition, US Steel faces internal challenges. Ancora Alternatives, an activist shareholder group, is attempting to replace the company’s leadership and board. The group argues that US Steel doesn’t need foreign investment but rather better management. If the Nippon deal collapses, Ancora hopes to use the $565 million breakup fee to fund modernization efforts.
“Burritt and the US Steel board have continued to drag shareholders down a dead-end road,” said Jim Chadwick, president of Ancora Alternatives. “The reality is that this merger with Nippon Steel is dead. $55 is not going to happen. US Steel doesn’t need a deal. It doesn’t need investment. It needs good management.”
With resistance from political leaders, unions, and activist shareholders, the future of US Steel remains uncertain. Whether Nippon Steel will succeed in its bid or be forced to abandon the deal is still unclear, but the battle for control of the historic American steel giant continues.
