The U.S. Steel Corp. Clairton Coke Works facility in Clairton, Pa. (Justin Merriman/Bloomberg)
President Donald Trump ordered another review of the potential sale of U.S. Steel Corp. to Nippon Steel Corp., opening the door to amend a decision by his predecessor, Joe Biden, to block the transaction.
In an order published April 7, Trump directed the Committee on Foreign Investment in the United States “to assist me in determining whether further action in this matter may be appropriate.” The order said the security panel should submit a report within 45 days.
U.S. Steel shares surged as much as 15% after the announcement, triggering circuit-breakers and halting trading briefly, before trimming gains. Shares were 11% higher at $42.58 as of 11:47 a.m. in New York.
The order comes three months after then-President Biden decided to block the takeover on national security concerns following the conclusion of an earlier Cfius review. Trump’s order gives new hope for the deal that was left for dead in January when Biden declared it a threat to national security.
READ MORE: Ancora Says Its US Steel Turnaround Plan Worth $75 a Share
“Reopening the Cfius investigation suggests a fresh chance on the deal, but ultimately it is up to the Trump administration as Cfius is effectively an arm of the White House,” Timna Tanners, an analyst at Wolfe Research, said in an email.
The fate of US Steel has become a highly politicized fight, with advocates for the takeover arguing that Nippon Steel’s purchase would help revitalize the American company through significant repairs to aging assets, investment to boost capacity and sharing steelmaking technology. The deal, though, has faced resistance from the United Steelworkers union that operates US Steel’s integrated mills across the American Rust Belt.
Trump has long opposed the sale, and has ruled out a majority stake for Nippon Steel. But he has also said he might allow the Japanese firm to own a minority share of the iconic American steelmaker.
Commerce Secretary Howard Lutnick emerged as a key player in determining the future of U.S. Steel, two weeks ago holding back-to-back meetings with Nippon Steel and activist investor Ancora Holdings Group.
Nippon Steel has long held that it would continue to pursue the $55-per-share all-cash offer it originally made to U.S. Steel shareholders, indicating that a minority investment was not their plan. Nippon Steel executives have met with the Trump administration, presenting plans that included additional investment in U.S. Steel’s union-run plants on top of the original bid to buy the company.
“With the contradictory headlines over the past months, investors are understandably still not convinced the deal will happen,” Tanners said.
Meanwhile, earlier Monday Ancora unveiled its turnaround plan for U.S. Steel that it estimates would deliver more than $75 per-share in value to shareholders if Nippon Steel’s takeover falls through. The hedge fund, which is seeking to replace U.S. Steel’s board and CEO, outlined a plan that would involve using existing cash and liquidity to invest about $3 billion to revitalize plants in Pennsylvania, Ohio and Illinois, according to the April 7 letter to shareholders.
