President Donald Trump has given the green light to Nippon Steel’s (OTC:NPSCY) $14.9 billion acquisition of U.S. Steel (NYSE:X). This concludes an 18-month journey marked by union resistance and dual national security assessments.
What Happened: Trump signed an executive order on Friday, permitting the merger to proceed, contingent upon the companies reaching an agreement with the Treasury Department to address national security concerns, according to a Reuters report on Saturday.
The companies confirmed they have signed the necessary agreement, fulfilling Trump’s conditions and effectively securing the merger’s approval.
The agreement includes a commitment to invest $11 billion by 2028, along with governance, production, and trade commitments. Nippon Steel will acquire a 100% stake in U.S. Steel, as stated by a spokesperson from the Japanese company.
However, details regarding the “golden share” promised to the U.S. government remain unclear. This share is intended to provide the government with veto power over significant decisions concerning U.S. Steel, according to U.S. Senator David McCormick (R-Pa.).
The report also noted that Nippon Steel plans an additional $3 billion investment for a new mill post-2028. This acquisition positions Nippon Steel to benefit from U.S. infrastructure projects while avoiding hefty breakup fees and tariffs faced by foreign competitors.
Why It Matters: The approval of this acquisition marks a significant shift in the U.S. steel industry landscape. Initially, President Trump had blocked Nippon Steel’s acquisition attempt due to security concerns, leading to a partnership instead.
This partnership was projected to create 70,000 jobs and inject $14 billion into the U.S. economy.
In a strategic move to secure the deal, Nippon Steel pledged to invest $14 billion, including up to $4 billion for a new steel mill. This was part of a broader strategy to win the Trump administration’s approval.
Moreover, the U.S. government will maintain strategic control over U.S. Steel through a golden share arrangement, granting it veto power over key operational decisions. This ensures that the U.S. retains influence over the steelmaker’s future.
Additionally, Trump doubled U.S. tariffs on imported steel to 50% in a bid to protect domestic jobs, while endorsing the sale of U.S. Steel to Nippon Steel. This tariff hike is seen as a measure to revitalize the American steel industry.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo courtesy: T. Schneider / Shutterstock.com
