After 18 months of intensive negotiations, regulatory obstacles, and high-level diplomacy, Nippon Steel Corporation has finally clinched its most ambitious acquisition to date: the $14.1 billion (£11.1 billion) purchase of United States Steel Corporation (US Steel), with formal approval granted late last week by former President Donald Trump.
While this represents a significant strategic milestone for the Japanese steelmaker—its largest overseas acquisition to date—it also opens a new chapter of investor scrutiny, particularly around cost commitments and political concessions.
Nippon Steel shares rose by as much as 5% on Monday, their strongest performance in over two weeks, reflecting cautious optimism in the wake of the deal’s approval.
Under the agreement, Nippon Steel has pledged to invest a further $14 billion in the US market over the coming years. These investments will span modernisation of existing plants, new steel mill development, and infrastructure upgrades. Crucially, the deal also includes governance concessions to the US government, which will retain influence over major corporate decisions and secure board representation.
Financing these commitments poses an immediate concern. The all-cash nature of the transaction and the scale of future investment obligations place pressure on Nippon Steel’s capital strategy. Investors will be closely monitoring how the company manages this without significantly diluting shareholder equity through new issuance.
The valuation itself has also raised eyebrows. Nippon Steel agreed to pay $55 per share—representing a 142% premium on US Steel’s share price before it entered sale discussions in 2023. Given the American company’s historically underwhelming earnings performance, analysts at SMBC Nikko have highlighted the urgency for early and visible returns on investment.
Investor dissent is already emerging. Singapore-based 3D Investment Partners has publicly urged shareholders to vote against the reappointment of Nippon Steel’s president and vice-chairman. The fund argues that the protracted pursuit of US Steel threatens to result in “irreversible” value erosion.
The deal’s path to completion was anything but straightforward. In January, it faced vocal opposition from both the Biden and Trump administrations, concerned over the sale of a historic American industrial brand to a foreign entity. However, Trump has since reversed his stance, framing the agreement as a “partnership” that ensures US Steel remains domestically anchored while benefiting from substantial foreign capital investment.
On Friday, Trump submitted a revised executive order, effectively overriding prior efforts to block the sale and allowing the transaction to move forward.
Strategically, the acquisition provides Nippon Steel with critical access to the North American market. It is a calculated move to offset declining domestic demand and strengthen the company’s global competitiveness against Chinese producers. The merger will establish the world’s second-largest steelmaker by volume, positioning it as a robust rival to Nucor Corporation, which has long dominated the US steel landscape.
The combined company is expected to bolster the US’s steelmaking capabilities in advanced sectors, particularly in producing steel essential for modernising the country’s electric grid—a key infrastructure focus.
The deal has also been cast as a triumph for Trump-era trade policy, which has relied on tariffs to encourage domestic production and foreign investment in US manufacturing. With Japan and the US currently engaged in ongoing trade negotiations, this high-profile transaction could lend fresh impetus to those discussions.
-Bloomberg
