U.S. Steel shares have recently surged to a 52-week peak following former President Donald Trump’s directive to reassess Nippon Steel’s proposed acquisition of U.S. Steel, valued at nearly $15 billion. This comes after President Joe Biden blocked the deal as his term was coming to an end, asserting his intent to prevent the sale much like Trump had pledged months prior. Late Monday, Trump instructed the Committee on Foreign Investment in the United States (CFIUS) to evaluate the transaction to help determine the necessity of further actions.
On Monday, the company’s shares shot up by 16% and maintained a modest increase on Tuesday. The classified review by CFIUS aims to identify possible national security threats from the contemplated acquisition, giving both Nippon and U.S. Steel the opportunity to address any arising issues. CFIUS is given a 45-day window to offer a recommendation to Trump, outlining whether the corrective measures suggested by the two companies adequately address the potential risks.
Ancora Holdings Group, a minority shareholder in U.S. Steel, expressed on Tuesday that it has no intention of obstructing Nippon’s planned bid. Additionally, the asset manager proposed postponing U.S. Steel’s annual shareholders meeting, initially slated for May 6, until post-June 18. This suggestion was made to allow shareholders ample time to deliberate following CFIUS’s 45-day review outcome. “There is no legitimate reason for U.S. Steel to rush to hold its Annual Meeting before the governmental review concludes,” Ancora stated.
Nippon Steel’s significant proposal of almost $15 billion to acquire U.S. Steel in 2023 has sparked political debates in the run-up to the 2024 presidential election, notably impacting Pennsylvania’s swing state. While Biden aligned with the United Steelworkers to oppose the merger, Trump, as a candidate, entirely resisted the idea of a sale.
Late last year, CFIUS provided its much-anticipated report on the national security implications of the merger to Biden. However, the panel couldn’t reach a consensus on the presence of national security threats. Subsequently, Biden halted the proposed deal, reaffirming his commitment to blocking the purchase of the Pittsburgh-based firm’s iconic company.
Throughout his campaign, Biden had voiced opposition towards the deal, gathering support from the United Steelworkers who were worried about the company’s commitment to existing labor agreements and potential job reductions, alongside concerns about the company’s clarity in financial dealings. In response, Nippon and U.S. Steel filed a federal lawsuit contesting Biden’s decision, accusing the Steelworkers’ union leader and another steelmaker of conspiring to thwart the buyout.
In February, Trump indicated that Nippon Steel might not proceed with the acquisition of U.S. Steel as envisaged. Instead, it was suggested that the Japanese company would invest in this pivotal American business.