Trump Supports Nippon Steel's Bid for US Steel

Source Credit : Reuters

Nippon Steel shares experienced a significant rally on Monday in Tokyo following U.S. President Donald Trump's endorsement of the company's $14.9 billion bid for U.S. Steel. This development has generated considerable interest in the market, highlighting the potential implications of international investment in the steel industry.

In a recent post on Truth Social, former President Trump announced that the proposed partnership between the two companies is expected to generate a minimum of 70,000 jobs and contribute an estimated $14 billion to the U.S. economy.

Trump stated that the majority of the investment is expected to take place over the next 14 months. He also announced plans to hold a rally at U.S. Steel in Pittsburgh on Friday, although he did not provide further details regarding the event.

The nature of Trump's term "partnership" remains ambiguous, particularly in relation to Nippon Steel's ongoing pursuit of a complete acquisition of U.S. Steel. Additionally, the White House has not provided any clarification regarding this announcement made on Friday.

U.S. Steel shares experienced a remarkable surge of 21% on Friday, as investors interpreted former President Trump's remarks—despite his initial opposition to the deal—as an indication that Nippon Steel had secured his approval for its long-anticipated takeover. This development represents the final significant obstacle to the completion of the transaction.

For Nippon Steel, Japan's leading steel manufacturer, this acquisition is integral to its global expansion strategy. The deal is poised to increase production capacity from the current 63 million metric tons to an impressive 86 million metric tons, particularly crucial as domestic demand continues to decline.

Shares of Nippon Steel, the world's fourth-largest steelmaker, surged by 5% to reach 3,025 yen in Tokyo, following a period of inactivity due to an overwhelming number of buy orders earlier in the day. This increase positioned Nippon Steel as the top percentage gainer on Tokyo's benchmark Nikkei 225 index.

A merger between the two companies would establish the world's third-largest steel producer by volume, trailing only China's Baowu Steel Group and Luxembourg-based ArcelorMittal, as reported by the World Steel Association.