Nippon Steel shares rise after Trump approves a $14.9 billion US steel bid

By Yuka Obayashi and Noriyuki Hirata

TOKYO (Reuters) – Nippon Steel shares rose on Monday after US President Donald Trump approved a $14.9 billion bid for US steel, clearing key hurdles in an 18-month tracking and ensuring access to key markets in its growth strategy.

This approval limited the turbulent process characterized by union resistance and two national security reviews.

Stocks of Nippon, the world’s fourth-largest steel maker, won between 3% and 2,915 yen in the daytime break after not being stolen from shopping orders early in the day. They rose about 1% over Tokyo’s benchmark Nikkei 225 index.

On Friday, Trump signed an executive order that would allow the partnership to continue, subject to an agreement with the Treasury Department to address national security concerns. The company then signed a contract and announced that it had effectively cleared the transaction.

The agreement includes $11 billion in new investments by 2028 and commitments to governance, production and trade. Nippon Steel has also confirmed its plans to acquire 100% of its US Steel common stock.

“Investors have welcomed the resolution of the uncertainty surrounding transactions,” said Daiwa Securities senior analyst Daiwa Securities.

“Overall, this contract appears to be relatively reasonable in both the size of the investment and the time frame,” he said. He said the acquisition is at the heart of Nippon Steel’s medium to long-term growth strategy.

The agreement will bring Nippon Steel’s annual production capacity to between 63 million tonnes to 86 million tonnes.

Kubota, chief strategist at Lakten Securities, said:

Still, some investors are concerned about the short-term financial burden from significant investments. Also, ownership of a US government integrated company known as “golden share” raised the question of the degree of control it can take.

“The risk of capital growth has not completely setbacked, but it may not be as serious as expected,” Ozaki said in a previous comment from Trump that the steelmaker is planning to invest $14 billion in the next 14 months.

Ozaki downplayed the management risks linked to Golden Share, saying, “Nippon Steel is anticipating growth in the US market for high-end products and is unlikely to experience production and employment cuts.”

(Reporting by Yuka Obayashi and Noriyuki hirata, edited by Christian Schmollinger)