Trump Keeps Nippon Steel Guessing Over U.S. Steel Purchase

The mixed signals and political theaters of President Trump complicate a historic cross -border acquisition and increase red flags for foreign companies.

The all year round saga of the Japanese Steel Corp. To buy us Steel took another twist at the end of last month when President Trump announced unexpectedly via social media after a “successful agreement” to finally conclude the agreement. But if we are now in the final act of the drama, it was only scene 1.

Scene 2 came and came on June 6, when Trump missed what was supposed to be a delay to approve or reject an agreement. Scene 3 is now expected before June 18, the date on which the two companies have agreed to conclude the agreement – unless they decide to extend it.

The question of whether the last curtain of this cliffhanger drama is still extended. Meanwhile, the interested parties of Steelworkers and their families in steel shareholders in the United States, including Pennsylvania elected officials reflect on an assortment of critical but still air details. And other non -American companies take care of prudence lessons on the search for American acquisitions in the Trump era.

With a decree in January, outgoing president Joe Biden had blocked the sale of American steel, which would have been one of the largest American acquisitions of all time by a Japanese company, for reasons of national security. Then, in April, in a very unusual decision, Trump ordered the Foreign Investment Committee in the United States to try to make a recommendation on Japanese steel Steel and US Steel. CFIUS had not agreed on a recommendation last fall and had returned the decision to the Blanche de Biden.

Trump received the committee’s recommendation on May 21, giving it 15 days – until June 6 – to decide to overthrow the Biden decree. He did not do it, although his social media post, and the statements made during a rally of US Steel of almost 90 years, my Valley Works – an Irvin factory outside Pittsburgh, said that he was ready to do so.

Instead, the White House said that he had only asked for the advice of CFIUS, and not a recommendation, and that the real deadline is on June 18. Biden, in his executive order, had given Nippon Steel and Us Steel until then to abandon their agreement, which means that to pass it, they must conclude it on this date.

What the president did not do is go back to his assertion that a historical agreement was at hand.

Us Steel will continue to be “controlled by the United States,” he said during the rally; “Otherwise, I would not have concluded the agreement”, which he claimed to have negotiated. Japanese Steel would plow $ 14 billion in its new properties, which essentially represents the entire purchase price, including $ 2.2 billion to increase steel production in Mons Valley and an additional $ 7 billion for the modernization of factories in other parts of the country, creating at least 70,000 jobs. In addition, there would be no layoffs and the new owner would keep all the current stoves in full operation for at least 10 years.

“You are not going to have to worry about this,” the president assured a community that depended on American steel for generations. “They are going to be much longer than that here.”

The stakeholders left their heads

Trump’s declaration left steel workers, shareholders, analysts and even the leaders of Nippon Steel trying to link significant loose ends. Published reports have indicated that the acquisition price of $ 55 per share that the two companies serve in December 2023 was unchanged, and that the agreement would always be a 100%acquisition, because Japanese Steel had always preferred: not an “investment”, as Trump suggested earlier.

But the greatest mystery implies the actual control structure that the agreement would be put in place on us in steel.

Republican senator David McCormick, Pennsylvania, told journalists following Trump’s remarks that the company will continue to have an American CEO and an American board of directors and that the American government will hold a “Gold share”, which means that it will have the right to approach certain members of the board of directors. This in turn “will allow the United States to make sure that the production levels are not cut and things like that,” he said.

No reason for material is emerged from discussions in Japanese steel Steel-US Nippon closely guarded on the way in which this mechanism would be put in place, however.

A “part of gold” generally means a block of actions which allows the part to retain them all other shareholders. But these arrangements, although common in Germany and in certain other parts of Europe, are “not typical” in the foreign acquisitions of American companies, notes Antonia Tzenova, head of the CFIUS and the industrial security team of the Holland & Knight law firm, and are generally resistant to the buyer.

If the parties have something other than a classic part of gold, they have not disclosed it – and this constitutes an additional mystery. Trump said he had not yet seen an official contract, although he received a CFIUS report. If a new agreement has been concluded, Tzinova underlines, Us Steel has the legal obligation to reveal it to its shareholders.

And the United Steelworkers, who represent American steel employees, say the union officials.

“Neither President Trump nor the Senator McCormick proposed details concerning the” planned partnership “or the nature of the” United States “control of the US Steel after the closing of a transaction,” said a union official in a company memo – even if these details could affect the US Steel contract with the union.

Difficult lessons for foreign companies

The two companies continued the sale obstinately for a year and a half; As if to highlight the urgency for a Japanese producer to acquire American operations, Trump announced shortly after his remarks in Mons Valley that Washington would double the prices on imported steel. But even pushing an agreement that has an economic meaning is more difficult in the current era, says Tzinova.

Nothing on the initial proposal of Japanese Steel to buy us steel was very unusual, she notes, just her timing. To come when a presidential electoral cycle was already underway, the agreement quickly became a political problem. The lesson for non -American buyers: avoid announcing an agreement during an electoral year.

But Japanese Steel could have helped its cause, adds Tzinova, if it had put pressure more strongly and stretched the hand more broadly to all the stakeholders involved. These stakeholders would include the union and its members, the local companies for which US Steel is an economic anchor and the governments of the States. The president of United Steelworkers, David McCall, noted in a conspicuous manner after Trump’s remarks according to which the union, who was firmly opposed to the sale, had not been included in the discussions of the two companies with the administration.

This is another lesson that non -American investors will have to learn in the future, advises Tzinova.