US PRESIDENT Donald Trump’s comments last week that Nippon Steel would invest in United States Steel instead of pursuing a takeover surprised shareholders. It turns out that his words blindsided both companies as well.
The proposed investment disclosed by Trump on Feb 7 following a meeting at the White House with Japanese Prime Minister Shigeru Ishiba was not communicated to either of the steelmakers beforehand, according to sources familiar with the matter, who asked not to be identified because they were not authorised to discuss the matter.
The president’s comments sent shares of US Steel plunging that day. Ishiba reiterated the planned investment in a TV interview on Sunday (Feb 2) in Japan. But both companies, who are still trying to salvage their US$14.1 billion blockbuster merger, remain silent on the idea. In private, they are uncertain as to what such an investment would even look like, the sources said.
On Thursday, Trump was distancing himself from his offer to negotiate an investment by the Japanese company, and on Friday said he would not mind Japan taking a minority stake in US Steel.
The confusion highlights the uncertainty Trump has infused into a merger that’s already been on life support since former President Joe Biden blocked it on grounds of national security. Investors had hoped Trump would change his mind and reverse Biden’s decision in a last-ditch effort to save the US$55-a-share agreement.
When asked for a comment, US Steel pointed to a tweet it posted after chief executive officer David Burritt met with Trump, thanking the president for his interest “in a thriving future for US Steel”. Nippon Steel was not immediately available for comment. The White House did not respond to a request for comment.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Burritt’s meeting with Trump, which the steelmaker found productive, came the evening before the president’s comments, adding to executives’ bewilderment, according to the sources.
US Steel’s stock fell as much as 10 per cent on Feb 7, with the shares swinging between US$41.38 and US$35.15 – still well below Nippon Steel’s original offer.
Trump on Thursday said his tariffs are giving a “lifeline” to the American company, adding that “US Steel right now has all the power”.
None of this has added confidence for US Steel shareholders. An investment is not a satisfactory substitute for a full takeover, according to multiple investors who were not authorised to speak on the record.
The president has not provided any additional details on his comments, according to the sources familiar. During Burritt’s meeting with Trump, the CEO pitched the idea that one solution would be to secure additional investments from Nippon Steel on top of the more than US$2 billion it has already pledged to rebuild the ageing assets of the steelmaker. Such a solution would be in tandem with Nippon Steel still buying the company, according to the sources familiar. BLOOMBERG
