[WASHINGTON] After more than 17 months of lobbying and close-fought negotiations to secure control of United States Steel, Japan’s Nippon Steel appeared on Friday (May 23) to have received a presidential blessing.
Days later, however, investors, executives and diplomats are still unsure of what exactly the US president endorsed.
US President Donald Trump heralded a “planned partnership” between the two industrial heavyweights, claiming it would create “at least 70,000 jobs” – roughly five times US Steel’s current American employees – and add US$14 billion to the US economy. But his unexpected announcement stopped short of explicitly endorsing Nippon Steel’s proposed US$14.1 billion cash takeover of US Steel, instead asserting that the company would “remain American”.
Speaking on Sunday, he provided little additional clarity.
“It will be controlled by the United States, otherwise I wouldn’t make the deal,” Trump told reporters at Morristown Airport in New Jersey as he headed back to Washington. “It’s an investment and it’s a partial ownership but it will be controlled by the USA.”
The two companies, left to grapple with ambiguity, publicly praised the “partnership” and a “bold” decision on Friday. Neither has since commented on specifics, or elaborated.
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US Steel shares closed more than 21 per cent higher on Friday anyway – after surging as much as 26 per cent – signalling renewed investor optimism around the acquisition.
Shoji Hirakawa, chief global strategist at Tokai Tokyo Intelligence Lab, said the news might also give Nippon Steel shares a boost at Monday’s open.
“Given the current situation, though, where things can change drastically depending on Trump’s statements, it’s difficult to see this one event as having absolute significance,” he said.
Trump, whose verdict is the last step in the process of determining whether Nippon Steel’s purchase can go ahead, had previously expressed support for Japanese investment in US Steel, but opposed a full takeover.
Writing on social media in December, he said that he was “totally against the once great and powerful US Steel being bought by a foreign company” – a rare area of alignment with predecessor Joe Biden, who blocked the deal in January, following a review by the Committee on Foreign Investment in the United States.
An approval of a full purchase now would mark a significant about-face.
Still, Trump’s statements late last week come as Japan and the US are also locked in negotiations over trade tariffs. Japan’s top trade negotiator, Ryosei Akazawa, met with Commerce Secretary Howard Lutnick and US Trade Representative Jamieson Greer in Washington last week as part of a third round of tariff talks. That followed a telephone call between Trump and Japanese Prime Minister Shigeru Ishiba.
Trump’s blessing – and billions of US dollars of Japanese capital – could bring about a new era for the US steelmaker, once the world’s largest company. But pressing ahead would also force Nippon Steel to justify to its shareholders an investment with significant constraints, including the potential obligation to keep ageing, less-efficient and higher-cost integrated assets running. BLOOMBERG
