Nippon to continue its fight to buy US Steel, despite what Trump believes

New York CNN —
Nippon Steel is looking to revive its plan to purchase iconic American steelmaker US Steel, despite President Donald Trump’s statements earlier this month that it is only interested in an “investment” and his pledge not to allow it to buy a controlling stake.
Trump declared after a meeting with Japanese Prime Minister Shigeru Ishiba earlier this month that Nippon was no longer interested in purchasing US Steel and was only interested in making an investment in the company.
But that was clearly not the case, as neither company has announced any change in plans. Nippon Steel President Tadashi Imai said on Tuesday that his company plans to have talks with US government officials as it seeks to revive the merger.
“Only by making an equity investment, we can make a major (capital) spending decision,” he said in comments reported by Reuters.
But Trump has made it clear he’s no more inclined to allow the politically unpopular deal than was President Joe Biden, who issued an order blocking the deal during his final weeks in office, citing national security concerns — despite US Steel’s limited sales to the military and the fact that Japan is a close geopolitical ally.
“I don’t want US Steel being owned by a foreign country. All they can have is an investment,” Trump said two days after he incorrectly announced that Nippon was dropping its plans to purchase US Steel outright.
Once the cornerstone of American industrial might, US Steel has been in decline for decades. Today it isn’t even the largest or second largest American steelmaker, let alone the world’s largest. By mid-2023, the once-iconic company had put itself up for sale. It reached a deal that December to be purchased by Nippon Steel for $14 billion, with billions more in promised investments for needed upgrades to its aging steel mills.
But the deal sparked fierce opposition from the United Steelworkers union, which represents about 11,000 of the company’s 14,000 US employees. The union said it was concerned about Nippon’s long-term commitment to the company’s remaining unionized mills.
There was also widespread bipartisan opposition among politicians aware of how unpopular a sale to Nippon would be. Not only with the union, but with many beyond the company’s workers – including its retirees and a much larger number of voters spread across the industrial Midwest who remember the company’s former might, when their fathers, grandfathers or even great-grandfathers worked there.
A general view of the exterior of the US Steel Edgar Thompson Works on March 20, 2024, in Braddock, Pennsylvania. Jeff Swensen/Getty Images
A sign along the main street where the US Steel mill is located in Braddock, Pennsylvania, on August 14, 2023. Justin Merriman/Bloomberg/Getty Images
US Steel management said that without the Nippon Steel deal and the billions it has promised to invest modernizing its facilities, it would be forced to close its union-represented mills. The union challenged that claim and US Steel’s domestic rival, Cleveland-Cliffs, has offered to buy any mills US Steel wants to close.
US Steel said it also remains committed to the $55 a share offer from Nippon for the entire company. As to the comments from Trump, the company said only: “Thank you, President Trump, for your interest in a thriving future of US Steel.”
US Steel, formed in 1901, was an early corporate merger that created the world’s first billion-dollar company. It grew into a behemoth in its first 70 or so years, powering America’s growing industrial might. Its rise was fueled by the growth of the automobile, roads and cities in the first half of the century, and the demand to rebuild after World War II and a lack of foreign competition.
Today, it is a relative afterthought. The $14.3 billion price of the troubled Nippon deal would put its value just below that of online pet retailer Chewy. Its current stock price puts its market value at only $8.5 billion.
Where to go without Nippon
Beyond the political problems the deal faces, the company is also dealing with an activist shareholder group, Ancora Alternative, which is leading a proxy fight to replace the company’s management and its board.
Ancora Alternative is promising to turn around the company’s fortunes without outside investment, though part of the funds it would like to use to modernize the company’s facilities would be from a $565 million breakup fee that Nippon would have to pay if the deal doesn’t go through.
Ancora Alternative insists it will be able to win support to change the leadership of US Steel, despite the fact that it owns only a small stake in the company and that shareholders overwhelmingly supported the Nippon deal in a vote last year.
“Burritt and the US Steel board have continued to drag shareholders down a dead-end road,” said Jim Chadwick, president of Ancora Alternatives. “The reality is that this merger with Nippon Steel is dead. $55 is not going to happen. The leadership at US Steel continues to throw good money after bad and pursue costly litigation. We believe US Steel doesn’t need a deal. It doesn’t need investment. It needs good management.”
A man in a crane charges slabs of iron at the Gary Works plant in Gary, Indiana, in 1945. Gary Works, US Steel’s largest manufacturing plant, was the largest steel mill in the world for most of the 20th century, according to the Chicago Sun-Times Bettmann Archive/Getty Images A group of workers from US Steel attend an English class in Pittsburgh in 1913. The Pittsburgh-based company formed in 1901 as a merger of the nation’s leading steel companies, including Carnegie Steel Corp. Library of Congress/Corbis/VCG/Getty Images Workers strike outside the US Steel plant in Gary, Indiana, in 1919. Chicago Sun-Times/Chicago Daily News Collection/Chicago History Museum/Getty Images An open hearth furnace is seen at a US Steel plant in Duquesne, Pennsylvania, in 1936. Bettmann Archive/Getty Images The San Francisco-Oakland Bay Bridge is constructed in California in 1936. It is one of many famous structures that US Steel supplied steel for and erected. Underwood Archives/Getty Images During World War II, US Steel played a critical role in the Allied forces’ war efforts. Here, Irma Engstom operates a punch machine in Gary, Indiana, that cut steel discs for 75mm shell cases. Bettmann Archive/Getty Images An electric furnace is tilted to pour 40 tons of stainless steel at a plant in Pennsylvania in 1945. Bettmann Archive/Getty Images Striking steelworkers picket in Homestead, Pennsylvania, in 1946. An estimated 750,000 workers took part in the walkout, shutting down 1,200 plants in 30 states. Bettmann Archive/Getty Images US War Secretary Robert P. Patterson, left, congratulates US Steel President Benjamin Fairless after he was awarded the Medal of Merit in 1946. At right is Gen. Dwight D. Eisenhower, who would later become president. Bettmann Archive/Getty Images At left, steel beams for the United Nations Secretariat Building are loaded at a US Steel plant in Munhall, Pennsylvania, in 1948. On the right, a woman knits from a fire escape in New York as the Secretariat Building is under construction. Bettmann Archive/Getty Images Workers wash off pulverized coal before forging a steel plate at a plant in South Charleston, West Virginia, in 1950. Hulton Archive/Getty Images A temporary television antenna is adjusted atop New York’s Empire State Building by a worker from US Steel’s American Bridge Co. in 1950. United States Steel Corporation/AFP/Getty Images A US Steel worker poses for a portrait circa 1951. Charles Rotkin/Corbis/VCG/Getty Images A worker oversees pipe production at a plant in Fairless Hills, Pennsylvania, circa 1955. Three Lions/Hulton Archive/Getty Images New twin blast furnaces operate at US Steel’s South Chicago Works in 1956. They were among the world’s largest at the time, standing 235 feet tall. Bettmann Archive/Getty Images A tavern sign tries to entice striking steelworkers in Chicago in 1959. Bettmann Archive/Getty Images Workers toil around the clock to complete the installation of the main support cables of the Verrazzano-Narrows Bridge in New York in 1963. Dave Pickoff/AP Men work at the Homestead Steel Works factory in Homestead, Pennsylvania, circa 1970. From its peak in the 1950s, the company began to fall behind upstart competitors both foreign and domestic. Competitors in Japan and Germany, which were forced to rebuild from scratch after World War II, used new technologies that required far less labor and energy. Pittsburgh Tribune-Review/AP A helicopter lifts a panel of steel over the Louisiana Superdome that was being built in New Orleans in 1973. Jack Thornell/AP A worker helps construct the top floors of the Sears Tower building in Chicago in 1973. Bettmann Archive/Getty Images Bob Simmons monitors controls for a furnace and rolling machine at a US Steel research and development facility in Monroeville, Pennsylvania, in 2005. Keith Srakocic/AP A man arrives at a US Steel plant in Clairton, Pennsylvania, in 2018. In recent years, US Steel has fallen far below other American steel companies in steel output and stock market value. Andrew Harrer/Bloomberg/Getty Images President Donald Trump speaks to steelworkers in Granite City, Illinois, in 2018. Trump’s administration imposed a 25% tariff on steel imports and 10% tariff on aluminum to shore up the struggling industries Daniel Acker/Bloomberg/Getty Images Steelworker Amanda Menendez watches the steel production process from office monitors in Granite City, Illinois, in 2018. Jeff Roberson/AP The US Steel plant in Clairton, Pennsylvania, is seen along the banks of the Monongahela River in 2023. Justin Merriman/Bloomberg/Getty Images In pictures: The history of US Steel Prev Next
Lourenco Goncalves, the CEO of Cleveland-Cliffs, also said he wants to buy US Steel, promising to move his company’s headquarters to US Steel’s Pittsburgh home and to assume the US Steel name for the combined company. But he wouldn’t be allowed to make a formal offer until June, due to earlier negotiations on a purchase dating back to 2023.
And his earlier offer was a fraction of the price that Nippon is offering.
US Steel is also facing contentious labor negotiations next year with the United Steelworkers union. The company has sued for the union and Cleveland-Cliffs for working to block the Nippon deal.
The powerful union was an early backer of Cleveland-Cliff’s interest in the company despite potential antitrust issues. It helped rally political opposition to the Nippon deal. But this week, USW President Dave McCall suggested he could be open to supporting Ancora’s bid.
Timna Tanners, steel analyst for Wolfe Research, said it’s tough to know who will end up on top in the various battles for US Steel.
“It seems very unlike a takeover by Nippon will happen,” Tanners told CNN. “This is all quite difficult to navigate. Cleveland-Cliffs doesn’t have the balance sheet to support its CEO’s comments.”
A tugboat pushes a barge near the US Steel facility in Clairton, Pennsylvania, on September 9. Justin Merriman/Bloomberg/Getty Images
Despite US Steel management’s comments that it would be forced to close its union-represented mills without the Nippon deal, Tanners said the company is profitable and stands to be even more profitable with what she said is the 20% rise in steel prices that has occurred since Trump announced plans for steel tariffs.
“US Steel’s balance sheet is as good as it’s been,” she said. “They put themselves in play because they didn’t like the share price, not because they were underwater. But Ancora’s argument to shareholders is going to lose steam as profitability improves.”
But even with higher steel prices, US Steel needs a massive amount of money to modernize its union-represented mills in Pennsylvania and Indiana.
“To bring the blast furnaces to modern standards would be a minimum $2 billion,” said Tanners.
Cleveland-Cliffs’ Goncalves said earlier this week the company hasn’t changed its views on US Steel, although the lawsuit against it by Nippon and US Steel would limit its comment.
“President Trump has said a number of times that Nippon Steel is an unacceptable buyer for a majority stake in US Steel,” Gonclaves told investors. “That said, no situation is so bad that it cannot become a lot worse. For Nippon Steel, it’s time to pack and go before their epic M&A disaster becomes a serious diplomatic issue.”