[Ferro-Alloys.com] Nippon Steel Raises Bid to $14B, Pledges New Mill for U.S. Steel (X) Deal

Nippon Steel has sweetened its bid for U.S. Steel, pledging a $14 billion investment package—including $4 billion for a brand-new mill—to win U.S. approval for its takeover of the iconic American producer.
The deal, initially blocked by national security concerns under the Biden administration and now under fresh review, would see $11 billion poured into U.S. Steel’s infrastructure through 2028, with an extra $1 billion earmarked for a greenfield site that could grow by $3 billion thereafter.
Market Overview:

• Nippon Steel ups its investment pledge to $14 billion, including $4 billion for a new mill.
• Previous pledge of $1.4 billion rose first to $2.7 billion, now to $14 billion.
• Deal faces a fresh national security review due May 21; Trump then has 15 days to decide.

Key Points:

• Nippon Steel offered $14.9 billion for U.S. Steel in December 2023.
• Proposal includes $565 million breakup fee and maintains U.S. Steel HQ in Pennsylvania.
• Steel tariffs of 25% still apply, strengthening bid in U.S. markets.

Looking Ahead:

• National security committee deadline on May 21, followed by a 15-day Trump review.
• Success hinges on swaying administration amid political opposition.
• U.S. Steel and Nippon Steel have filed lawsuits alleging bias in the review process.
  Bull Case:

• Nippon Steel has significantly increased its investment pledge to $14 billion for U.S. Steel, including $4 billion for a new mill and $11 billion to enhance existing infrastructure by 2028, demonstrating a strong commitment to revitalizing the American steel producer.
• This substantial capital infusion could modernize U.S. Steel's aging facilities, secure jobs, and bolster domestic manufacturing capacity, aligning with goals to strengthen the U.S. industrial base.
• Nippon Steel asserts it is uniquely positioned to make the necessary investments to secure U.S. Steel's future, benefiting employees, communities, and customers.
• The acquisition would give Nippon Steel access to the American market, which is experiencing a demand surge driven by infrastructure laws, and the company has committed to maintaining U.S. Steel’s headquarters in Pennsylvania.
• The deal is supported by a $565 million breakup fee, indicating Nippon Steel's serious intent, and comes at a time when 25% steel tariffs remain, potentially strengthening the competitive position of domestically upgraded facilities.
• A fresh review ordered by President Trump has raised hopes among some investors that the deal might receive a green light, despite previous opposition.
  Bear Case:

• The proposed takeover faces strong bipartisan political opposition, including from President Trump and former President Biden, primarily due to national security concerns and a preference for U.S. Steel to remain American-owned.
• The deal is subject to a fresh national security review with a May 21 deadline, followed by a 15-day review period by President Trump, making the outcome highly uncertain. The previous attempt was blocked by the Biden administration on national security grounds.
• U.S. Steel and Nippon Steel have filed lawsuits challenging the legality of the previous blockage, alleging the review process was politically biased and lacked credible national security concerns, highlighting a contentious approval environment.
• The United Steelworkers (USW) union opposes the acquisition, raising concerns about job security, collectively bargained benefits, and the protection of American steel production.
• Legal experts have noted significant hurdles, describing the situation as "uncharted territory" with long odds for overcoming the combined legal and political challenges.
• The intense scrutiny and political maneuvering suggest the deal's fate could be influenced more by election-year politics and voter sentiment in swing states than by purely economic or security merits.
• A rival bid from Cleveland-Cliffs, potentially in partnership with Nucor, could emerge, further complicating Nippon Steel's efforts.

If approved, the merger would mark one of the largest foreign takeovers of a U.S. industrial icon, underlining the lengths to which Nippon Steel is willing to go to secure access to the American market and its infrastructure law–driven demand surge.
Sources say the expanded $14 billion pledge underscores a high-stakes appeal to both the Biden and Trump teams to approve the deal, as Nippon Steel aggressively courts U.S. regulators and lawmakers ahead of the looming deadline.

• [Editor:tianyawei]