After the Japanese company struggled for 18 months to close the deal, Nippon Steel’s $ 14 billion acquisition of US Steel has given him an unusual amount of power.
According to the companies, the deal came to an end on Wednesday.
Nippon purchased 100% of US Steel shares for $55 per share, which was the company’s original price at December 2023, according to the agreement terms. A non-economic golden share and a national security agreement signed with the Trump administration are also disclosed in a press release about the filing.
The chairman and CEO of Nippon Steel, Eiji Hashimoto, thanked the president for his service. After a difficult path to approval, which high-level political opposition sparked, he claimed Nippon Steel agreed to represent an unusual level of control conceded by the companies to the government to save the deal.
As noted in a weekend social media post by Commerce Secretary Howard Lutnick, the golden share grants the US , government veto power over a number of corporate decisions, including those regarding shutting down factories, reducing production capacity, and moving jobs overseas.
According to the release, the share gives the government a veto over any potential acquisitions of rival businesses, including a potential relocation of US Steel’s headquarters from Pittsburgh, Pennsylvania, as well as job transfers abroad, name changes, and possible acquisitions of rival companies.
National security lawyers said on Monday that the inclusion of the golden share would require the Committee on Foreign Investment in the US to approve it in order for it to be approved.
Through the acquisition, US Steel will have $11 billion in investment through 2028, including $1 billion for a new US mill, which will increase by $3 billion in the future.
While its foreign competitors are subject to steel tariffs of 50%, it will also allow Nippon Steel, the fourth-largest steel producer in the world, to make money off of a number of infrastructure projects in America.
Additionally, the Japanese company can avoid paying the $565 million in breakup costs if the businesses don’t get their approvals.
Nippon Steel announced on Wednesday that its annual crude steel production capacity is expected to reach 86 million tonnes, which is more in line with its global strategic goal of 100 million tonnes of capacity.
Nippon Steel was referred to as a “great partner” by the president. In their campaign efforts to woo voters in Pennsylvania, a crucial swing state, both the Democratic Party and Trump, a Republican, came out against the deal last year.
Biden allegedly halted the deal on national security grounds shortly before he left office in January, causing lawsuits from the businesses, who argued the unbiased national security review they received. The charge was refuted by the Biden White House. The Trump administration’s opening of a new 45-day national security review into the proposed merger in April presented a new opportunity for the steel industry.
Trump’s comments in the press, which ranged from welcoming a straightforward “investment” by the Japanese company to vouching for Nippon Steel, created confusion.
Trump’s May 30 rally sparked hopes of approval, and a sign-off was finally achieved on Friday with an executive order allowing the businesses to combine if they signed an NSA grant to the US , government, which they did.
Source: Aljazeera
Leave a Reply