Nippon Steel boosts investment pledge for proposed US Steel deal

[NEW YORK] Nippon Steel has bolstered its pledge to invest in United States Steel in the event that US President Donald Trump approves the Japanese company’s proposed US$14.1 billion takeover, according to sources familiar with the matter.

Nippon Steel is now offering to build a new steel mill, save existing steelworker jobs and potentially add many more unionised roles, said the sources, who asked not to be identified because the latest plan has not been published.

The higher investment commitment was negotiated by the Trump administration, they said. It’s still not clear whether Trump will ultimately approve the deal, they said.

The saga over the acquisition of US Steel has dragged on for 17 months. Despite support from the US company’s management, the proposed transaction attracted scorn from the United Steelworkers union and both candidates in last year’s presidential election. Joe Biden subsequently blocked the takeover in the final days of his administration, following a review by the Committee on Foreign Investment in the United States.

Despite Trump last month reiterating his opposition to US Steel being acquired by a Japanese company, Nippon Steel is still holding out the hope that the deal can be rescued. Trump has ordered another CFIUS review of the national security implications of the combination of both companies. The deadline for that report to be submitted to the president is on Wednesday (May 21).

Nippon Steel and US Steel both declined to comment. The White House did not immediately respond to a request for comment.

Shares of US Steel rose 3.2 per cent to close at US$41.62 in New York. Nippon Steel has proposed paying US$55 per share. Nippon Steel’s American depositary receipts dropped 2 per cent.

Reuters reported earlier about the new steel mill as part of an enhanced US$14 billion investment plan should the takeover proceed.

Nippon Steel told investors on a call last week that they did not expect any formal announcement from the White House until the Jun 5 statutory deadline for Trump to make a decision, according to sources familiar with the matter.

The company also did not rule out a possible extension of the merger agreement, indicating that a decision by the government could be pushed out to a later date, the sources said. BLOOMBERG