Formidable competitor: Trump speaking at US Steel’s iconic Mon Valley facility in Pennsylvania two weeks ago. The deal creates a combined company that will be the world’s second-largest steelmaker. — AP
WASHINGTON: Nippon Steel Corp won conditional US approval for its US$14.1bil purchase of United States Steel Corp (US Steel), capping a lengthy saga in a tie-up that will create one of the world’s largest steel companies.
In a release last Friday, 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 US$55-per-share deal, the Japanese company will invest an additional US$11bil by 2028, including an initial commitment in a greenfield project that would be completed after 2028.
Nippon Steel had previously raised its pledged additional investment in an effort to win President Donald Trump’s approval.
The firm will also spend an extra US$3bil 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 US$14bil.
Earlier last Friday, Trump formally opened the door to approving the sale of US 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 US 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 US Steel in the release said they had received regulatory approvals and that “the partnership is expected to be finalised promptly.”
The deal is expected to close by June 18, the merger agreement deadline, Japan’s Nikkei reported on Saturday, without saying where it got the information.
Trump earlier last week said the United States 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 United States would get a golden share but didn’t elaborate.
The terms of the security agreement include significant and unprecedented US 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 US steel industries to generate new innovation and lead to the strengthening of the close partnership between Japan and the US,” Japan’s Economy, Trade and Industry Minister Yoji Muto said in a written statement. “We welcome the decision of the US government.”
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 US 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 United States.
Japan has been engaging in negotiations with the United States 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. — Bloomberg
