On Wednesday, U.S. Steel shares ceased trading on the New York Stock Exchange (NYSE) after Japan's Nippon Steel finalized its acquisition of the historic American industrial company. This acquisition has sparked considerable discussion, particularly given the political context surrounding it, with former President Donald Trump having previously indicated that a partnership would allow U.S. Steel to remain American-owned.
The NYSE informed the Securities and Exchange Commission (SEC) on Wednesday that U.S. Steel's shares would be delisted following its transition into a wholly owned subsidiary of Nippon Steel North America. The shares stopped trading at 8:30 a.m. ET on the same day, marking a significant shift in the company's status. The official delisting will be in effect starting June 30, according to the NYSE.
Trump has been vocal about his opposition to Nippon’s takeover bid during the lead-up to the 2024 presidential election. However, his stance appeared to shift after taking office, leading to a new review of the acquisition deal. This review came after former President Joe Biden blocked the deal in January due to national security concerns.
On May 23, Trump announced what he described as a partnership between U.S. Steel and Nippon on his social media platform, Truth Social. This announcement left investors and union members confused regarding any potential changes to the original deal structure. Despite adopting the president's partnership rhetoric, both U.S. Steel and Nippon maintained adherence to the terms of the original merger agreement filed with the SEC in December 2023.
Even though U.S. Steel will now operate as a subsidiary of Nippon, it will continue to retain its name. As part of the acquisition process, Trump mandated that U.S. Steel and Nippon sign a national security agreement with the U.S. government, a condition for the deal’s approval.
This agreement gives the U.S. president a golden share, providing him veto power over several crucial decisions. These include:
Changing U.S. Steel's name or relocating its headquarters from Pittsburgh. Relocating U.S. Steel's operations outside the U.S. Moving jobs or production facilities outside the U.S. Decisions regarding the closure or idling of domestic manufacturing facilities. Trade, labor, and sourcing decisions made outside the U.S. Reductions in capital investments as outlined in the national security agreement. Acquisitions of competing businesses within the U.S.Moreover, the agreement stipulates that a majority of U.S. Steel’s board members, as well as its CEO, must be U.S. citizens. Nippon has also committed to ensuring that U.S. Steel remains incorporated in the United States.
As part of the acquisition agreement, Nippon Steel is set to invest $11 billion into U.S. Steel by 2028. This investment will include an initial outlay of $1 billion towards a greenfield project slated for completion after 2028, which is expected to further enhance U.S. Steel's operations and capacity.
The evolving landscape surrounding U.S. Steel's acquisition by Nippon Steel highlights significant implications for American industry, national security, and the future of steel production in the U.S. As these developments unfold, stakeholders will be closely monitoring the impact on both the market and the workforce.
