Nippon Steel still committed to full U.S. Steel takeover -executive

Nippon Steel remains committed to acquiring a full stake in U.S. Steel despite national security concerns and potential roadblocks from former President Biden, with a CFIUS review deadline of May 21 and a final decision expected by June 5. Nippon Steel is seeking a meeting with U.S. Treasury Secretary Scott Bessent to clarify President Trump's stance on the $15 billion merger, emphasizing that only full ownership would allow them to share core technology and strengthen U.S. Steel, with plans to invest $14 billion in U.S. Steel's operations if the deal is approved. The company expects net profit to fall 43% in fiscal year 2026 due to slumping global steel prices.

Analysis

Nippon Steel (5401.T) remains resolute in its intention to complete a full acquisition of U.S. Steel (X.N) for $15 billion, despite the proposed merger being previously blocked by former President Joe Biden on national security grounds in January. According to Nippon Steel Vice Chairman Takahiro Mori, only full ownership, not a joint venture, would enable the critical sharing of core technology to strengthen U.S. Steel, stating "There is no free technology." The deal is currently undergoing a renewed national security review by the Committee on Foreign Investment in the US (CFIUS), initiated by President Donald Trump in April, with a deadline for review completion set for May 21 and a final decision from President Trump anticipated by June 5. To navigate this, Nippon Steel is actively seeking a meeting with U.S. Treasury Secretary Scott Bessent, who chairs CFIUS, to better understand President Trump's position. Contingent on approval, Nippon Steel plans a substantial $14 billion investment into U.S. Steel's operations, including up to $4 billion for a new mill, asserting this aligns with Trump's policy by boosting foreign investment and domestic manufacturing while preserving U.S. Steel's identity and addressing national security concerns via a U.S.-majority board and CFIUS-appointed directors. This strategic pursuit occurs as Nippon Steel anticipates a 43% decline in its net profit for the fiscal year ending March 2026, attributed to slumping global steel prices driven by China's overproduction and the impact of U.S. tariffs.

Key Decisions for Investors

• Investors in U.S. Steel (X.N) should closely monitor communications regarding the CFIUS review outcome and President Trump's final decision, expected by June 5, as this will be the primary catalyst for near-term stock volatility.
• For Nippon Steel (5401.T), the potential benefits of the U.S. Steel acquisition and the planned $14 billion follow-on investment must be carefully weighed against the company's own projection of a 43% net profit decline by FY2026 and the challenging conditions in the global steel market.
• The significant political and regulatory uncertainty surrounding the $15 billion U.S. Steel acquisition creates a pronounced event-driven risk and reward scenario, particularly for U.S. Steel shares, necessitating a thorough assessment of the probability of deal approval versus collapse.