[Text/Observer Network Zhang Jingjuan] After more than 17 months of lobbying and intense negotiations, Japan's Nippon Steel Corporation's acquisition plan of US Steel Corporation seemed to receive the approval of US President last week. However, Trump's remarks on Sunday once again cast a shadow over this transaction.
According to Reuters, local time on May 25, Trump said that as part of the cooperation between US Steel Corporation and Nippon Steel Corporation, the United States would have control over the company.
"This will be controlled by the United States, otherwise I won't make this deal," Trump said.
He told reporters that relevant members of Congress had urged him to complete this deal. "This will be an investment. Nippon Steel will acquire partial ownership, but it (US Steel) will still be controlled by the United States," he added.
On May 23, Trump suddenly announced on social media that US Steel Corporation and Nippon Steel Corporation would reach a "planned partnership." Nippon Steel will invest in US Steel, and the headquarters of US Steel will continue to remain in Pittsburgh, Pennsylvania. Trump claimed, "This cooperation will create at least 70,000 jobs and add $14 billion to the US economy. Most of the investments will be in place within the next 14 months."
On that day, the stock price of US Steel Corporation surged by 21%. However, media outlets such as The Wall Street Journal and The Washington Post pointed out that neither the two companies nor the White House disclosed whether Nippon Steel was acquiring US Steel or merely investing in it.
In the ambiguous situation, both companies responded positively to Trump's positive intentions. On the 24th, Nippon Steel issued a statement praising Trump's bold decision and emphasized that the company, like the Trump administration, is "committed to protecting American workers, the steel industry, and national security in the United States." The Nikkei Asian Review commented that Trump's decision cleared the way for the progress of this deal.
Local time on September 2, 2024, near Pittsburgh, Pennsylvania, USA, the US Steel Corporation plant. IC Photo
In 2023, due to continuous losses, US Steel, which has over 120 years of history, had to put itself up for sale. Several companies, led by Cleveland Cliffs, tried to acquire it, but were rejected by shareholders due to low bids. Four months after US Steel released the message, in December, Nippon Steel announced plans to acquire US Steel for more than twice the price offered by Cleveland Cliffs, at $14.9 billion, which immediately attracted attention.
As the US presidential election approached, the acquisition case quickly became a political issue. Both then President Biden and Trump, who represented the Republican Party at the time, strongly opposed it, stating that the acquisition case endangered national security. In January, Biden signed an executive order before leaving office to block Nippon Steel's acquisition of US Steel. Later, the two companies formally filed a lawsuit against Biden and the US Committee on Foreign Investment (CFIUS), requesting the court to revoke Biden's order to block the acquisition and re-examine the case.
On February 7, Trump announced after meeting with Shigeru Ishiba that Nippon Steel had abandoned the acquisition and was seeking a large-scale investment instead. Shigeru Ishiba also publicly stated that US Steel "will still be an American company," which was seen as confirming Trump's statement. However, on February 25, Nippon Steel President Masayoshi Imai said that Nippon Steel would maintain its original acquisition plan, making US Steel a wholly-owned subsidiary of Nippon Steel, and use this as a starting point to discuss with the US government.
In April this year, Trump ordered CFIUS to re-examine the case. This is the first time that a US president has requested a re-examination of a cross-border merger and acquisition case that has already been terminated before the court made a ruling.
According to the Financial Times of the UK, last week, Nippon Steel agreed to triple its investment in US Steel as a final effort to persuade Trump to change his stance. According to Reuters, there are disagreements among the institutions that make up CFIUS in their recommendations to President Trump. Most institutions believe that any national security risks brought about by this matter can be addressed through countermeasures.
The Nikkei Asian Review pointed out that Trump's decision was made shortly after the White House confirmed that Trump had received CFIUS's recommendation.
Currently, the United States and Japan are still negotiating tariff issues. Japanese negotiators, including Japan's Minister of Economic Revitalization Akira Akazawa, mentioned during the third round of ministerial tariff negotiations held in Washington on the 24th that this meeting was "more candid and in-depth" compared to previous ones.
Bloomberg reported that Trump's "support" and the injection of Japanese funds could open a new era for this former global giant in the steel industry. However, pushing forward with the acquisition will force Nippon Steel to prove to its shareholders that under the obligation to retain outdated, inefficient, and high-cost integrated assets, this heavily restricted investment is justified.
This article is an exclusive contribution from the Observer Network and cannot be reproduced without permission.
Original text: https://www.toutiao.com/article/7508695367374914067/
Disclaimer: The views expressed in this article are solely those of the author. You can express your attitude by using the [Upvote/Downvote] buttons below.