Latest news with #NipponSteel
Kyodo News
34 minutes 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
Japan Times
2 hours ago
- Business
- Japan Times
Nippon Steel drops lawsuit against U.S. government after acquiring U.S. Steel
Nippon Steel is dropping a lawsuit against the United States government, chairman and CEO Eiji Hashimoto said as the company finalized its acquisition of United States Steel after an 18-month battle to complete the transaction. The suit has been rendered moot as a result of the successful purchase of the American steel-maker, Hashimoto said in reply to a question from The Japan Times after his meeting with trade minister Yoji Muto on Thursday evening. 'We were able to achieve our objective, so there is no longer a meaningful reason to continue that case — in a good sense,' he explained. A separate civil suit against a competitor and a union leader has not yet been dropped. Nippon Steel and U.S. Steel filed the lawsuit against the U.S. government in January to challenge former U.S. President Joe Biden's blocking of the transaction on national security grounds. They argued that the companies were denied due process and other rights, and claimed that the $14.9 billion transaction was blocked for political reasons. U.S. President Donald Trump, who had voiced opposition to the deal during his presidential campaign, reversed his predecessor's decision last week . He said the Japanese firm could buy the U.S. company if it signed a national security agreement with the U.S. government. Nippon Steel finalized the transaction on Wednesday. The civil suit alleges that United Steelworkers union President David McCall, Cleveland-Cliffs and Lourenco Goncalves, CEO of Cleveland-Cliffs, engaged in 'illegal and coordinated actions' to sabotage the U.S. Steel acquisition. Goncalves has dismissed Nippon Steel's claims, saying the accusations are "baseless." An outspoken critic of the Nippon Steel-U.S. Steel deal, Goncalves described Japan as 'evil' for 'teaching China how to dump steel.' In the lawsuit, he was accused of launching a 'public smear campaign' and 'trafficking in xenophobic stereotypes' about foreign investors to kill the deal. Cleveland-Cliffs made an unsolicited bid in July 2023 to purchase U.S. Steel for $35 a share — later raised to $54, according to reports — in cash and stock. Nippon Steel made an all-cash offer of $55 a share. McCall, who has been vocal in his opposition to the Nippon Steel transaction from the outset, said in a Wednesday statement that the union will 'continue watching' and hold Nippon Steel to its commitments. 'We will decide how to proceed after closely observing how the other parties respond, so no final decision has been made on that yet,' Hashimoto said of the civil lawsuit.
CNA
4 hours ago
- Business
- CNA
CNA938 Rewind - Done deal between Nippon Steel, US Steel ends 18-month saga
CNA938 Rewind Nippon Steel has closed its US$14.1 billion acquisition of US Steel, bringing an end to a bruising 18-month takeover battle that was embroiled in American politics for months until finally gaining support from US President Donald Trump. Andrea Heng and Susan Ng take a closer look at the terms and implications for the steel industry, and impending tariffs, with Professor Lim Tai Wei, Department of Business Administration, Soka University and Japan expert.
Qatar Tribune
7 hours ago
- Business
- Qatar Tribune
Nippon Steel-US Steel deal closes with United States safeguards
Agencies Nippon Steel completed its multi-billion-dollar acquisition of US Steel on Wednesday, granting rare veto-like power over strategic decisions to Washington with a 'golden share'. The announcement concludes a saga that began in December 2023, when Nippon Steel agreed to acquire the linchpin of American steelmaking for $14.9 billion. An outright buyout sparked bipartisan political opposition, including from President Donald Trump, who railed against the proposed deal throughout the 2024 presidential campaign. But last month he announced a pivot, branding the revamped venture—blocked by former president Joe Biden on security grounds—as a 'partnership' rather than a takeover. A national security agreement between the companies and the US government provides that approximately $11 billion in new investments will be made by 2028. And Washington's non-economic golden share allows it to appoint one independent director as well as granting consent rights for proposed capital budget cuts among other powers. Nippon Steel CEO Eiji Hashimoto said Thursday in Tokyo that this 'won't hinder activities that we hope to conduct.' 'The agreement is fully satisfactory to us, as it ensures the management freedom... essential for business investment,' Hashimoto told reporters. 'We intend to start implementing measures for revitalization and development as soon as possible,' he said, promising not to 'transfer jobs and production sites elsewhere.' It is 'only natural' that the US government would be concerned about the takeover of a symbolic company, which dates back to 1901, Hashimoto added. A source close to the matter said Nippon Steel had bought all common shares of US Steel, completing the merger. The deal creates the world's fourth biggest steelmaker—but Nippon Steel faces several big challenges, from trade tariffs to weak demand for steel products worldwide. Nippon Steel shares were up 2.4 percent Thursday afternoon, even as Tokyo's benchmark Nikkei index slumped 0.9 percent. Pennsylvania Senator Dave McCormick, a Republican, thanked Trump on X and called the outcome 'a massive victory for working families in the Mon Valley, our economy, our national security, and America's manufacturing future!' But the United Steelworkers (USW) union, which vigorously fought the deal, vowed to 'continue watching, holding Nippon to its commitments,' according to a statement. 'We will use the most powerful tool workers have against global corporations: collective bargaining.' Biden had blocked the transaction in early January, shortly before leaving office. He said that placing 'one of America's largest steel producers under foreign control' could 'create risk for our national security and our critical supply chains.' Besides agreeing to keep US Steel's Pittsburgh headquarters and to maintain US production, the national security agreement calls for a majority of US Steel's board to be US citizens, as are key leaders including the CEO. The 'golden share' does not entitle the US government to dividends, nor does it require Washington to make investments in the company. While the structure gives the government 'extraordinary' influence, the mechanism could be difficult to enforce in a downturn if Nippon fails to comply, said Atlantic Council senior fellow Sarah Bauerle Danzman.
Yahoo
11 hours ago
- Business
- Yahoo
Cleveland-Cliffs (CLF) Dives 4% After Losing US Steel Bet
We recently published a list of 10 Stocks Take A Shocking Nosedive. Cleveland-Cliffs Inc. (NYSE:CLF) is one of the worst-performing stocks on Thursday. Cleveland-Cliffs dropped its share prices by 4.43 percent on Wednesday to end at $7.33 apiece as investors sold off positions following Nippon Steel's successful acquisition of US Steel Corp. It can be recalled that Cleveland-Cliffs Inc. (NYSE:CLF) repeatedly attempted to acquire US Steel since 2023 after former president Joe Biden blocked Nippon Steel's purchase plan over national security issues. However, even its proposal had been repeatedly rejected. President Donald Trump officially gave his green light for Nippon Steel's acquisition on condition that it will sign a national security agreement with the US government. Cleveland-Cliffs Inc. (NYSE:CLF) is a US-based steel and iron ore manufacturer based in Cleveland, Ohio, and which strongly supported Trump's imposition of tariffs on steel imports. A welder in a hardhat soldering steel plates to a blueprint plan. Duties on imported steel and aluminum products make domestic manufacturers such as Cleveland-Cliffs Inc. (NYSE:CLF) more appealing to customers as it may bolster demand for their products, support competitive pricing for locally-produced goods, and further reduce competition with international producers. While we acknowledge the potential of CLF as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock. READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires. Disclosure: None. This article is originally published at Insider Monkey.
