And just like that, the X ticker is available for Elon Musk to purchase and take his social media company public.
Nippon Steel completed its $14.1 billion acquisition of iconic American peer, US Steel, bringing to a close protracted negotiations which lasted for 18 months amid US political wrangling.
As the Nikkei reported, the Japanese company will acquire 100% of U.S. Steel's ordinary shares, while handing a "golden share" to the U.S. government under a National Security Agreement both companies signed with Washington.
"Nippon Steel is excited about opening a new chapter of U. S. Steel’s storied history. Building on our investment, the transfer of our advanced technologies, and the unwavering efforts of management and the employees of both companies, Eiji Hashimoto, Nippon Steel’s CEO said in a press release, announcing the completion of the deal late Wednesday night local time.
The deal consolidates Nippon Steel's position as the world's fourth largest steel maker, and comes just a matter of days after U.S. president Donald Trump cancelled the decision by former President Joe Biden to block the Japanese company's acquisition of its American peer.
A golden share typically hands the holder a right to veto certain changes to the company. The golden share in U.S. Steel "prevents" actions like relocating the American company's headquarters from Pittsburgh, changing the name of the company, and closing plants "before certain timeframes" according to the U.S. commerce secretary Howard Lutnick.
The NSA agreement signed by the two companies also stipulates approximately $11 billion in new investments by 2028, including in a greenfield project, and commitments related to production in the U.S. and "trade matters," according to both companies.
Nippon Steel first announced the acquisition back in December 2023 but it quickly became mired in steelworker union opposition and U.S. election-year politics. President Joe Biden issued an order in January this year blocking the purchase, prompting Nippon Steel to respond with a lawsuit against the former leader.
The Japanese company sees the deal as a top priority for its medium- to long-term growth. Steel demand is expected to grow in the U.S. due to factors like the growth of electric vehicles and infrastructure renewal. That contrasts with Japan, where demand is expected to fall due to a shrinking population.
Trump's 50% tariff on all steel imports, an increase from the previous 25%, has made exporting to the U.S. harder, making the acquisition even more pertinent.
The deal will see Nippon Steel's crude production rise to 57.82 million tons from 43.64 million tons, taking the Japanese company closer to the third largest producer, Ansteel Group of China, which produced 59.55 million tons in 2024. However, analysts have raised concerns over the financial burden of the takeover, as well as the promised additional investments.
"We expect an increase in investment costs in the near term owing to funding for the U.S. Steel acquisition, additional investments post-acquisition, and investments in electric furnaces in Japan," said Yuji Matsumoto, analyst at Nomura, in a recent note. "We still think the stock looks undervalued but will lower our target price to reflect the aforementioned financial burden and weak demand in Japan," he added.
Aside from the investment costs, analysts at Jefferies raised concerns over the Japanese company's post-merger integration. "We think that Nippon Steel has a limited track record operating a business of this scope," it said in a note.
Its "success stories" of overseas ventures in the U.S. state of Alabama and in India have "been done with the help of ArcelorMittal," but its "unassisted acquisition of G/GJ Steel in Thailand almost immediately went loss-making after the deal closed," the analysts said.
https://www.zerohedge.com/markets/x-ticker-now-available-nippon-steel-completes-14bn-us-steel-deal
