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Kyodo News
4 hours ago
- Business
- Kyodo News
FOCUS: Nippon Steel buyout spat hints at business fragility in U.S.
By Junko Horiuchi, KYODO NEWS - 7 hours ago - 13:07 | Japan, All U.S. President Donald Trump's bid to attract investment threatens to undermine the appetite for corporate spending in an ironic twist, with the 18-month saga over Nippon Steel Corp.'s buyout of United States Steel Corp. showing the growing vulnerability of businesses in the U.S. market, according to analysts. The U.S. administration's earlier blocking of the $14.1 billion takeover deal was clearly driven by political motives and corporate executives will no longer be able to make decisions regarding their U.S. operations based only business criteria, they said. The wrangling in the high-profile case could lead global companies to think twice about making sizeable investments and acquisitions in the world's largest economy, with many moving to reduce their exposure to the U.S. market. "I do think many companies are pausing investments and major capital expenditures, not only because of the Nippon-U.S. Steel deal but due to general uncertainty surrounding political and economic dynamics in Washington," said Zack Cooper, senior fellow at the American Enterprise Institute. Trump had repeatedly rejected Nippon Steel's plan to take full control of U.S. Steel. But Nippon Steel, the world's fourth-largest steel producer, and U.S. Steel, the 29th largest, said Wednesday following Trump's approval of the buyout plan that they had signed a national security agreement with the U.S. government and finalized the acquisition transaction. Under the deal, the Japanese steelmaker is obliged to invest $11 billion by 2028 on bolstering the U.S. steelmaker's operations, far more than the previously planned $2.7 billion. The U.S. government also obtained a golden share allowing it to veto key management decisions, such as when reducing investment, shedding production capacity in the United States or closing plants. Nippon Steel CEO Eiji Hashimoto told a press conference on Thursday that his company had learned from a year and a half of negotiations with the U.S. government that a flexible management strategy is required. The top executive said it had been believed that governments should not get involved in business deals. "But are strengthening their involvement in economic and business matters through industrial policy," he said. Trump's predecessor, Joe Biden, initially blocked the purchase of U.S. Steel on national security grounds, saying the manufacturing icon, based in Pittsburgh, Pennsylvania -- a key battleground state in the 2024 presidential election -- should be "American-owned and American-operated." Trump also opposed the deal during the presidential race, saying the acquisition of a minority stake in U.S. Steel would not cause any issues, but foreign ownership of the company would not be good psychologically. He ordered a new review of the deal by the Committee on Foreign Investment in the United States in April with a deadline for Trump to make a final decision initially set for June 5. "Because predictability is insanely low right now in the United States, Japanese companies are going to cut back the percentage of their business in the country," said Keisuke Hanyuda, the chief executive of Owls Consulting Group. While rising costs must be dealt with, "The last thing a business wants is to lose predictability," said Hanyuda, a former Japanese trade ministry official in charge of trade talks. Nippon Steel is betting on firm demand for high-tensile strength steel in the U.S. market, capitalizing on its advanced production technology for high-end steel plates used in products such as electric vehicles. The United States is one of three growth markets for the Japanese steelmaker, compensating for shrinking domestic demand. Under Trump, the steel, aluminum, auto and semiconductor sectors have been targeted by specific tariffs driven by political pressures and companies in these industries should consider other markets for growth to hedge their risks, analysts say. Earlier this month, Trump signed an order doubling the tariffs on steel and aluminum imports to 50 percent. "I think Japanese companies will have a difficult time purchasing famous American companies in sectors that President Trump prioritizes, such as autos, steel, aluminum, and chipmaking," Cooper at the American Enterprise Institute said, though investment in other sectors may still be viable. "But any Japanese company that is considering a major deal in the United States should develop a detailed political strategy before announcing a deal, lest they suffer similar roadblocks as Nippon Steel," he said. The United States remains a lucrative market with high growth potential but some global companies are beginning to reduce their reliance on it after the tariffs imposed by Trump, Hanyuda said. The European Union and the Association of Southeast Asian Nations, for example, have resumed economic partnership negotiations, while the EU is also looking at Japan, which is part of a trans-Pacific free trade pact that took effect in 2018 without the United States. Related coverage: U.S. Steel's strategic importance growing: Nippon Steel CEO Nippon Steel finalizes deal to make U.S. Steel wholly owned Trump effectively approves Nippon Steel's takeover of U.S. Steel
Kyodo News
12 hours ago
- Business
- Kyodo News
FOCUS: Nippon Steel buyout spat hints at business fragility in U.S.
By Junko Horiuchi, KYODO NEWS - 7 minutes ago - 13:07 | Japan, All U.S. President Donald Trump's bid to attract investment threatens to undermine the appetite for corporate spending in an ironic twist, with the 18-month saga over Nippon Steel Corp.'s buyout of United States Steel Corp. showing the growing vulnerability of businesses in the U.S. market, according to analysts. The U.S. administration's earlier blocking of the $14.1 billion takeover deal was clearly driven by political motives and corporate executives will no longer be able to make decisions regarding their U.S. operations based only business criteria, they said. The wrangling in the high-profile case could lead global companies to think twice about making sizeable investments and acquisitions in the world's largest economy, with many moving to reduce their exposure to the U.S. market. "I do think many companies are pausing investments and major capital expenditures, not only because of the Nippon-U.S. Steel deal but due to general uncertainty surrounding political and economic dynamics in Washington," said Zack Cooper, senior fellow at the American Enterprise Institute. Trump had repeatedly rejected Nippon Steel's plan to take full control of U.S. Steel. But Nippon Steel, the world's fourth-largest steel producer, and U.S. Steel, the 29th largest, said Wednesday following Trump's approval of the buyout plan that they had signed a national security agreement with the U.S. government and finalized the acquisition transaction. Under the deal, the Japanese steelmaker is obliged to invest $11 billion by 2028 on bolstering the U.S. steelmaker's operations, far more than the previously planned $2.7 billion. The U.S. government also obtained a golden share allowing it to veto key management decisions, such as when reducing investment, shedding production capacity in the United States or closing plants. Nippon Steel CEO Eiji Hashimoto told a press conference on Thursday that his company had learned from a year and a half of negotiations with the U.S. government that a flexible management strategy is required. The top executive said it had been believed that governments should not get involved in business deals. "But are strengthening their involvement in economic and business matters through industrial policy," he said. Trump's predecessor, Joe Biden, initially blocked the purchase of U.S. Steel on national security grounds, saying the manufacturing icon, based in Pittsburgh, Pennsylvania -- a key battleground state in the 2024 presidential election -- should be "American-owned and American-operated." Trump also opposed the deal during the presidential race, saying the acquisition of a minority stake in U.S. Steel would not cause any issues, but foreign ownership of the company would not be good psychologically. He ordered a new review of the deal by the Committee on Foreign Investment in the United States in April with a deadline for Trump to make a final decision initially set for June 5. "Because predictability is insanely low right now in the United States, Japanese companies are going to cut back the percentage of their business in the country," said Keisuke Hanyuda, the chief executive of Owls Consulting Group. While rising costs must be dealt with, "The last thing a business wants is to lose predictability," said Hanyuda, a former Japanese trade ministry official in charge of trade talks. Nippon Steel is betting on firm demand for high-tensile strength steel in the U.S. market, capitalizing on its advanced production technology for high-end steel plates used in products such as electric vehicles. The United States is one of three growth markets for the Japanese steelmaker, compensating for shrinking domestic demand. Under Trump, the steel, aluminum, auto and semiconductor sectors have been targeted by specific tariffs driven by political pressures and companies in these industries should consider other markets for growth to hedge their risks, analysts say. Earlier this month, Trump signed an order doubling the tariffs on steel and aluminum imports to 50 percent. "I think Japanese companies will have a difficult time purchasing famous American companies in sectors that President Trump prioritizes, such as autos, steel, aluminum, and chipmaking," Cooper at the American Enterprise Institute said, though investment in other sectors may still be viable. "But any Japanese company that is considering a major deal in the United States should develop a detailed political strategy before announcing a deal, lest they suffer similar roadblocks as Nippon Steel," he said. The United States remains a lucrative market with high growth potential but some global companies are beginning to reduce their reliance on it after the tariffs imposed by Trump, Hanyuda said. The European Union and the Association of Southeast Asian Nations, for example, have resumed economic partnership negotiations, while the EU is also looking at Japan, which is part of a trans-Pacific free trade pact that took effect in 2018 without the United States. Related coverage: U.S. Steel's strategic importance growing: Nippon Steel CEO Nippon Steel finalizes deal to make U.S. Steel wholly owned Trump effectively approves Nippon Steel's takeover of U.S. Steel
Time of India
a day ago
- Business
- Time of India
Is the Nippon Steel and US Steel merger a threat to American workers?
Nippon Steel 's 2023 announcement that it would buy US Steel , the linchpin of American steelmaking, sparked political and union opposition in the United States before being finally sealed Wednesday under strict conditions. This is how the saga developed: August 2023 The struggling US Steel launches a strategic review after receiving several unsolicited partial or total buyout offers. It rejects an offer from its American competitor, Cleveland-Cliffs (CLF), despite potential support from the steelworkers' union USW. December 2023 Nippon Steel announces an agreement to buy US Steel for $14.1 billion, plus $800,000 in debt -- unanimously approved by both boards of directors -- with finalisation expected by the third quarter of 2024. But the USW fiercely opposes the deal, saying it will not support anyone other than CLF. Days later, US President Joe Biden calls for "serious scrutiny" in terms of supply chain reliability. The United States is the world's leading steel-importing country. The US government agency responsible for assessing foreign investment risks, CFIUS, scrutinises the project. March 2024 Biden, campaigning for a second term, opposes the buyout in defence of American "workers", saying it is vital for US Steel "to remain an American steel company that is domestically owned and operated". US Steel, however, asserts that the deal can "combat the competitive threat from China", the sector's global leader. April 2024 US Steel shareholders overwhelmingly approve the buyout at an extraordinary general meeting. July 2024 Japanese media outlets reveal that Nippon Steel has hired Mike Pompeo, former US Secretary of State under Donald Trump, to advocate for its cause. September 2024 Kamala Harris, now the Democratic presidential candidate, states that US Steel should "remain American-owned and American-operated". Nippon Steel asserts that it will remain "a US company" with a majority of the board being American citizens. Trump, the Republican candidate, pledges to oppose the buyout proposal. US Steel threatens to shutter facilities in Pennsylvania -- perhaps the most critical swing state in the election between Harris and Trump -- if the sale is blocked. December 2024 Trump, now President-elect, confirms he will "block this deal from happening". He vows on social media to "make U.S. Steel Strong and Great Again" through tax incentives and tariff hikes. Nippon Steel condemns the opposition as "inappropriate" influence of politics. In mid-December, CFIUS fails to reach a decision owing to a lack of consensus within its ranks. January 2025 Biden blocks the acquisition on national security grounds. The issue escalates into a diplomatic dispute: Japanese Economy Minister Yoji Muto deems the decision "incomprehensible and regrettable". US Steel and Nippon Steel threaten legal action over "illegal interference" before eventually obtaining a Washington-granted extension until June to formally abandon their project. They express continued commitment to seeing it through. February 2025 Trump suggests an alternative to a merger: an investment from Nippon Steel. April 2025 Trump orders a new review of the project by CFIUS to determine whether "further action in this matter may be appropriate", reopening the door to the buyout. The review will involve "identifying potential national security risks associated with the proposed transaction and providing adequate opportunity to the parties to respond to such concerns". May 2025 Following the release of a new CFIUS advisory, Trump approves a partnership between the steelmakers through an unspecified agreement allowing US Steel to "REMAIN in America". Nippon Steel says it "applauds" the bold action taken by Trump but USW warns of a "disaster for American steelworkers". June 15, 2025 Trump removes the final regulatory hurdle by signing an executive order designed to eliminate all national security risks following the buyout. The US government will hold a perpetual non-economic "golden share" allowing it veto power over significant decisions affecting American jobs. Beyond the previously agreed acquisition price of $14.1 billion excluding debt, an additional $14 billion in investments by Nippon Steel will be required, $11 billion of which must be completed by 2028. June 18, 2025 Nippon Steel and US Steel announce their merger agreement, with the American group subsequently requesting the New York Stock Exchange to delist its stock.
Chicago Tribune
2 days ago
- Business
- Chicago Tribune
Northwest Indiana reacts to Nippon finalizes $15B takeover of U.S. Steel
Gary Mayor Eddie Melton said 'history was made' on Wednesday, and he's proud that the city was part of it. A year and a half after a deal between Nippon Steel and U.S. Steel was announced, the two companies said they finalized their 'historic partnership,' according to the Associated Press. The pursuit by Nippon Steel for the Pittsburgh company was buffeted by national security concerns and presidential politics, delaying the transaction for more than a year after U.S. Steel shareholders approved it. It also forced Nippon Steel to expand the deal, including adding a so-called 'golden share' provision that gives the federal government a say in some matters. The idea of a 'golden share' emerged as a way to resolve national security concerns and protect American interests in domestic steel production. With the 'golden share,' the U.S. government would have de facto rights on company decisions and appointments. The combined company will become the world's fourth-largest steelmaker, and bring what analysts say is Nippon Steel's top-notch technology to U.S. Steel's antiquated steelmaking processes. In exchange, Nippon Steel gets access to a robust U.S. steel market, strengthened in recent years by tariffs under President Donald Trump and former President Joe Biden, analysts say. 'Together, Nippon Steel and U.S. Steel will be a world-leading steelmaker, with best-in-class technologies and manufacturing capabilities,' the companies said. Nippon Steel and U.S. Steel did not list the full terms of the deal, and did not release a national security agreement struck with Trump's administration. But in a statement Wednesday, the companies said the federal government will have the right to appoint an independent director and 'consent rights' on specific matters. Those include reductions in Nippon Steel's capital commitments in the national security agreement, closing or idling of U.S. Steel's existing domestic facilities and changing U. S. Steel's name and headquarters. Northwest Indiana's Gary Works facility should receive $1 billion as part of the deal, a Nippon executive said in late 2024. Melton has vocalized his support since about August 2024, when it was first announced that Gary Works would receive about $300 million, if the deal is approved. 'I am pleased thus far on how the current agreement has been structured that allows U.S. Steel to remain an American-owned and operated corporation under this new partnership,' Melton said in a Wednesday statement. 'I'm equally pleased the pledges made during this negotiation will be honored, and I'm optimistic that this was the best decision for steel workers and the communities like Gary across the community.' In the coming weeks, Melton said he will meet with both steel companies about the projected job increase to Gary, improving environmental protections and future economic development. No current union jobs will be lost and no plants will close as part of the deal, Melton said. U.S. Rep. Frank Mrvan, D-Highland, said he was encouraged by the national security guarantees, but said more detail and oversight are key to making it a good deal for Northwest Indiana workers. 'From the very beginning of this proposed acquisition, I was steadfast in voicing serious concerns about the implications of foreign ownership — particularly Nippon Steel's record on trade practices — and the critical importance of preserving American control over our steel production, which is vital to our national security,' Mrvan said in a Wednesday statement. 'In the months since, as the Vice Chairman of the Congressional Steel Caucus, I've listened closely to the many voices raised across the political spectrum, including from the prior administration and the Trump Administration. It is clear that this unified front of concern and advocacy played a crucial role in shaping the terms, incentives, and safeguards now in place. 'Thanks to this persistent and bipartisan pressure, we are in a stronger, more secure position today than we were at the time of the initial announcement. But let me be clear: this is not the end of our oversight. Nippon Steel must be held to every promise made — from promises to the hardworking steelworkers of Northwest Indiana and the City of Gary, to the economic and strategic interests of the United States. We will not hesitate to act if those commitments are broken.' United Steelworkers President David McCall — who has historically opposed the deal — released a statement Wednesday, saying Trump has assumed 'a startling degree of personal power over a corporation.' McCall's statement also said the steel companies have 'aggressively promoted' the deal since December 2023, which he believes downplayed the concerns about long-term future of USW jobs and national security. 'However, our union will remain,' McCall said. 'We will continue watching, holding Nippon to its commitments. And we will use the most powerful tool workers have against global corporations: collective bargaining.' USW's current agreement expires in September 2026, McCall said, and the union is prepared to respond if job security, pensions, retiree health care or other benefits are threatened. In December 2023, Nippon first announced that it planned to buy the American company for $14.9 billion in cash and debt, and committed to keep the U.S. Steel name and Pittsburgh headquarters. Trump, Biden and former Vice President Kamala Harris all previously said they opposed the deal. Before Biden left office, he blocked the acquisition after a review by the Committee on Foreign Investment in the United States, which outlined national security concerns. In February, Trump began to try to undo Biden's actions, saying Nippon would drop its acquisition of U.S. Steel to make an 'investment, rather than a purchase,' according to Post-Tribune archives. On May 23, Trump announced that he would approve an investment, which would reportedly add $14 billion to the national economy, although details are still unclear. Micah Pollak, associate professor of economics at Indiana University Northwest, previously told the Post-Tribune that while details are still unknown, he's confident the deal will benefit region steelworkers. Melton's support of the deal has added to Pollak's confidence. 'If he is saying that he thinks this is a good deal, then I'm inclined to trust him because he knows more (about the details),' Pollak previously said. 'The only real thing that people are hinging on and worrying about is the specific contract with union workers, and that's the last unknown, but I'm optimistic that they'll be able to negotiate a good deal.'
UPI
2 days ago
- Business
- UPI
Japan's Nippon Steel finalizes purchase of U.S. Steel
On Wednesday, Japan-based Nippon Steel finalized its buyout of U.S. Steel (U.S. Steel logo seen May 30 at Edgar Thomas Plant near Braddock, Penn.) as it reverts to the newly-minted Nippon Steel North America. Photo by Archie Carpenter/UPI | License Photo June 18 (UPI) -- Japan-based Nippon Steel on Wednesday completed its buyout of U.S. Steel, changing its name to Nippon Steel North America, as the former U.S. industrial giant ended trading on Wall Street under its former iconic industrial brand. Last week, President Donald Trump officially signed off on the deal, paving the way for a finalized acquisition after the president for weeks spoke of a "partnership" between the two steel companies that would allow U.S. Steel to stay an American-owned business entity. However, the U.S.-based steel giant became a wholly owned subsidiary company of Nippon Steel North America on Wednesday after the New York Stock Exchange issued a notice to the U.S. Securities and Exchange Commission that U.S. Steel's listing would be removed. U.S. Steel ended trading in the morning hours as Nippon's massive American investment became final with a June 30 effective date for its NYSE delisting. Former President Joe Biden blocked the Nippon buyout in January prior to exiting the White House, citing national security as the U.S. government's primary concern over the acquisition. Trump originally opposed Nippon's takeover during the 2024 presidential election but flip-flopped upon taking office and in April ordered an official review of the deal. In May, Trump stirred confusion among investors and union leaders on the agreed-upon terms of the sale when he announced in a social media post a "planned partnership" between Nippon and U.S. Steel. Nippon Steel never balked from the initial December 2023 merger agreement terms in its SEC filing but did adopt Trump's style of language, insinuating a preconceived "partnership." Meanwhile, U.S. Steel will continue to operate under its name. Trump did, however, manage to compel both steel companies to sign a U.S. national security pact as a condition to his approval in clearing the transaction. According to the terms of the national security agreement, Nippon will invest $11 billion by 2028 in U.S. Steel, which includes an initial $1 billion for a Greenfield project post-2028. In addition, U.S. Steel's CEO and a majority of its board members must be American citizens with U.S. Steel to remain a U.S.-incorporated entity. Trump was given a "golden share" under the agreement that grants him veto power over a number of decision, such as U.S. Steel's name change or future exit from its Pittsburgh headquarters in Pennsylvania to outside of the United States. In addition, the White House will hold sway of the moving production of steels jobs, some authority in the closure of domestic plants, sourcing and other business-related acts.
