Executive: Nippon Steel's Us Steel Takeover Plan Has Support In Steelmaking Areas

Al Root

The deal for Nippon Steel to buy U.S. Steel for $55 a share in cash, and invest billions into the U.S., is in its death throes after a key U.S. review couldn't reach a definitive conclusion about National security.

Monday, The Washington Post reported that the Treasury Department's Committee on Foreign Investment in the U.S., of CFIUS, couldn't reach an decision on Nippon's proposed takeover and referred the case to President Biden to decide.

CFIUS reviews deals "to determine the effect of such transactions on the national security of the United States."

President Biden, President-elect Trump, and several other politicians have come out against the deal. The failure of CFIUS to say one way or another if the deal was a threat is another nail in its coffin.

CFIUS and the Treasury Department didn't immediately respond to a request for comment.

CFIUS won't say it but we will. There is no National Security concern with a U.S. Steel and Nippon tie-up. Japan is an ally. Their money would be used to enhance American steelmaking assets. What's more, the design and making of steel isn't a mystery to any country and hasn't been for roughly a century. Russian entities have been allowed to buy American steel assets in the past. Evraz owns facilities in Oregon and Colorado.

"The transaction between U.S. Steel and Nippon Steel enhances U.S. national and economic security through investment in manufacturing and innovation — by a company based in one of the United States' closest allies," said U.S. Steel in an emailed statement. "This is a transaction that should be approved on its merits, and one that should be a model for 'friendshoring' investment. It is the best way, by far, to ensure that U.S. Steel, including its employees, communities, and customers, will thrive well into the future."

Most political opposition to the deal referenced American psychology or the idea that America needed to make its own steel. The steel mills, of course, weren't moving, and Nippon — the world's fourth-largest steel producer — committed to investing billions that U.S. Steel doesn't have to improve operations. U.S. Steel is the third-largest steel maker in the U.S. and ranks in the mid-20s globally.

What's most likely now is the deal will die and investors will be left wondering if Cleveland-Cliffs will come back to the table. An August 2023 Cliffs' cash and stock bid worth roughly $35 a share kicked off this process. Cliffs won't have to match Nippon's offer.

If no deal emerges, U.S. Steel will need higher steel prices from an improving industrial economy to see higher earnings in the coming years. Benchmark steel prices are about $700 a metric ton today. They averaged closer to $1,000 a ton in 2023 and $1,100 a ton in 2022.

U.S. Steel stock was down 1.1% at $31.03 in early trading, while the S&P 500 was up 0.4% and the Dow Jones Industrial Average had ticked up 0.1%.

Coming into Tuesday trading, U.S. Steel stock was down about 36% year to date. Most of that decline came in February when President Biden came out against the Nippon deal.

Write to Al Root at allen.root@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(Updates attribution to US Steel and includes US Steel's remarks in the fourth paragraph.)

United States Steel's proposed acquisition by Japan's Nippon Steel has been referred to US President Joe Biden for a decision after a government committee failed to agree on whether to approve the deal, US Steel said in a statement late Monday.

Nippon said Tuesday that its proposed takeover of the American industrial giant said that it remains confident the transaction will be approved if it is judged fairly, the Wall Street Journal reported.

Nippon Steel asked Biden to consider steps it is proposing to address US concerns, including matters of national security and employment, WSJ reported.

US Steel said Japan is one of America's closest allies. "The President now has 15 days to act," the company said. "The transaction between U. S. Steel and Nippon Steel enhances U.S. national and economic security through investment in manufacturing and innovation - by a company based in one of the United States' closest allies - and forges an alliance in steel to combat the competitive threat from China."

Both Biden and President-elect Donald Trump have voiced opposition to the steelmaker's sale to a foreign entity.

Nippon did not immediately reply to MT Newswires' request for comment.

In a Dec. 17 letter to the Committee on Foreign Investment in the United States, or CFIUS, Nippon Steel alleged the White House had "impermissible undue influence" over CIFUS' national security review of its $14.9 billion bid and threatened legal action if the deal is blocked.

US Steel shares were down more than 2% in Tuesday's premarket activity. Nippon Steel's Tokyo-traded shares were up less than 1% at Tuesday's close.

United States Steel's proposed acquisition by Japan's Nippon Steel has been referred to US President Joe Biden for a decision after a government committee failed to agree on whether to approve the deal, news outlets reported late Monday and Tuesday, citing a Nippon Steel statement and unnamed sources.

Nippon said Tuesday that its proposed takeover of the American industrial giant had been referred to the White House and that it remains confident the transaction will be approved if it is judged fairly, the Wall Street Journal reported.

Nippon Steel asked Biden to consider steps it is proposing to address US concerns, including matters of national security and employment, WSJ reported.

US Steel was quoted as saying that Japan is one of America's closest allies, according to the report.

Both Biden and President-elect Donald Trump have voiced opposition to the steelmaker's sale to a foreign entity.

Nippon and US Steel did not immediately reply to MT Newswires' request for comment.

In a Dec. 17 letter to the Committee on Foreign Investment in the United States, or CFIUS, Nippon Steel alleged the White House had "impermissible undue influence" over CIFUS' national security review of its $14.9 billion bid and threatened legal action if the deal is blocked.

US Steel shares were down more than 2% in Tuesday's premarket activity. Nippon Steel's Tokyo-traded shares were up less than 1% at Tuesday's close.

By Joe Woelfel

Stock futures pointed to a mixed open for Wall Street on Tuesday, a holiday-shortened session.

These stocks were poised to make moves Tuesday:

Semiconductor company, Nvidia, the maker of chips that are the favored choice for training artificial-intelligence models, rose 0.2% in premarket trading after jumping 3.7% on Monday. Analysts at Morgan Stanley last week issued a bullish report on AI chip companies and called Nvidia a top pick for 2025, optimistic about the growth prospects for the company's latest graphics processing unit named Blackwell. Nvidia shares have gained 182% in 2024.

Broadcom was rising 2% in premarket trading after the semiconductor and software company ended Monday's session up 5.5% and was the best-performing stock in the S&P 500. Shares extended their gain for the year to 108%. Morgan Stanley also chose Broadcom as one of its favorite ideas for 2025. Analyst Joseph Moore likes Broadcom for its growth opportunity beyond 2025.

United States Steel declined 3.4% with Nippon Steel's plan to acquire the U.S. steel company referred to President Biden after a government panel reviewing the plan failed to reach a consensus. Biden has opposed the proposed $14.1 billion acquisition. The president now has 15 days to reach a final decision, said the White House.

D-Wave Quantum was up 0.3% after filing a $125 million mixed shelf offering. Shares of the quantum computing company, based in Palo Alto, Calif., closed up 27% on Monday. It has risen 826% this year.

Limoneira, the citrus and avocado producer, said it expects avocado volumes in fiscal 2025 of 7 million to 8 million pounds, down from the 15.1 million pounds of avocados it sold in 2024. The company anticipates fresh lemon volumes in the range of 5 million to 5.5 million cartons in the fiscal year. The stock declined 3%.

International Seaways jumped 8.1% following the announcement it will be joining the S&P SmallCap 600 on Dec. 30. The company is a transporter of crude oil and petroleum products.

Write to Joe Woelfel at joseph.woelfel@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.