US President Donald Trump’s recent remarks regarding Nippon Steel Corp.’s investment in United States Steel Corp. instead of pursuing a takeover caught shareholders off guard. It appears that his statements also surprised both companies involved. The investment proposal, revealed by Trump on February 7 after a meeting with Japanese Prime Minister Shigeru Ishiba at the White House, was not communicated to either steelmaker in advance, according to sources who requested anonymity due to the sensitive nature of the information. Following Trump’s comments, US Steel’s stock experienced a significant drop that day. Ishiba reiterated the planned investment during a television interview in Japan on Sunday, but both companies, which are still attempting to salvage their $14.1 billion merger, have remained silent on the matter. Privately, they are uncertain about what such an investment would entail, according to the sources.
On Thursday, Trump began to distance himself from his suggestion of negotiating an investment from the Japanese company, and on Friday, he expressed that he would not oppose Japan taking a minority stake in US Steel. This confusion underscores the uncertainty Trump has introduced into a merger that has been struggling since former President Joe Biden blocked it on national security grounds. Investors had hoped that Trump might reconsider and reverse Biden’s decision in a last-ditch effort to preserve the $55-a-share agreement.
When approached for comment, US Steel referred to a tweet it posted after CEO David Burritt’s meeting with Trump, thanking the president for his interest in a prosperous future for the company. Nippon Steel did not respond immediately, and the White House also did not provide a comment. Burritt’s meeting with Trump, which the steelmaker deemed productive, took place the evening before Trump’s comments, adding to the executives’ confusion. On February 7, US Steel’s stock fell as much as 10%, fluctuating between $41.38 and $35.15, still significantly below Nippon Steel’s initial offer.
Trump stated on Thursday that his tariffs are providing a “lifeline” to the American company, asserting that “US Steel right now has all the power.” However, this has not instilled confidence among US Steel shareholders, as an investment is not seen as a satisfactory alternative to a full takeover, according to several investors who spoke on the condition of anonymity. The president has not offered any further details regarding his comments, according to the sources. During Burritt’s meeting with Trump, the CEO proposed that one potential solution could involve securing additional investments from Nippon Steel, in addition to the more than $2 billion it has already committed to modernizing the steelmaker’s aging assets, while still pursuing the acquisition of the company.
