In December last year, Nippon Steel, a giant in the Japanese steel industry and a leading global steel manufacturer, announced its intention to acquire the iconic U.S. steel company United States Steel Corporation for $55 per share, totaling a staggering $14.9 billion, with a premium of 142%. This marks the largest acquisition in Nippon Steel's history.
However, this acquisition has not been smooth, as United States Steel Corporation is one of the symbolic companies of the American steel industry, with a history of over 120 years. President Joe Biden made a statement about this acquisition in March of this year, emphasizing in his statement that it is "vitally important" for United States Steel to "remain American-owned and domestically operated", showing support for United States Steel and its workers.
Biden's statement caused a stir in the capital market, leading to a sharp decline in the stock price of United States Steel. Although the United Steelworkers union (USW) had publicly stated in February that President Biden would support them, Biden did not respond at the time and only acknowledged his support a month later.
In theory, acquisition is a business activity, but the U.S. government has ample experience in dealing with such matters. Recently, there were rumors that the Department of Justice has initiated an antitrust investigation into this acquisition. If the investigation finds it to be true, the acquisition will not be able to proceed.
The acquisition was originally planned to conclude in the second half of this year, but the antitrust investigation was not part of the plan and it is likely to be delayed until after the November U.S. elections. Although the current President Joe Biden does not support the acquisition, and while he has not explicitly opposed it, the United Steelworkers union, which he supports, has repeatedly expressed opposition.
Insiders say that the focus of the Department of Justice investigation is on the ownership of a steel plant in Calvert, Alabama, owned by Nippon Steel and ArcelorMittal, the world's second-largest steel manufacturer, as a joint venture. If Nippon Steel completes the acquisition, the Japanese company will control about 20 million tons of capacity in the United States. The Department of Justice may review any other assets currently owned by Nippon Steel to ensure there are no anti-competitive behaviors.
If this acquisition is successfully completed, Nippon Steel will surpass Ansteel to become the world's third-largest steel manufacturer, significantly increasing its influence in the United States.
