Trump nears decision on U.S. Steel takeover
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President Trump has opposed Nippon Steel's proposed acquisition of U.S. Steel since almost the moment it was announced. He also is fixated on signing deals that include large foreign direct investment commitments.
Why it matters: We're about to learn which force is stronger.
Driving the news: Nippon has offered to invest around $14 billion into U.S. Steel if the acquisition is approved, including the building of a new steel mill, as reported by Reuters and confirmed by Axios.
- This is up from an initial $1.4 billion investment pledge and revised $2.7 billion offer, and nearly rivals the acquisition's $14.9 billion price-tag.
- A source familiar with the situation says that the increase resulted from direct negotiations with the White House.
Behind the scenes: Tomorrow is the deadline CFIUS to complete its national security review of the merger, but this is anything but a normal CFIUS process.
- For starters, CFIUS already completed a Nippon-U.S. Steel review under former President Biden, who blocked the deal — leading to an active lawsuit.
- Second, CFIUS typically either approves a transaction or confidentially suggests to the President that it be blocked. In this case, CFIUS is expected to focus instead on providing Trump with all the relevant information, including the new investment promises.
- Moreover, it appears that Commerce, not Treasury, has been leading many of the discussions.
State of play: Trump would have until June 5 to make his determination, while the companies currently have June 18 as their closing date.
- But neither are set in stone, given how casually Trump has treated the TikTok divestiture deadline and the companies' past willingness to extend their own deadlines.
- There's also the added complication of tariff negotiations between the U.S. and Japan.
The bottom line: There's always been a strong argument that this merger doesn't pose much national security risk, as Japan is a strong U.S. ally.
- At the same time, however, national security and economic incentives are supposed to be distinct lanes. If it appears that a foreign companies can essentially spend their way to CFIUS sign-offs, then it would be a brave new world for M&A.
