Nippon Steel Corp. saw its shares tumble by as much as 2.6% on Monday, marking the largest intraday drop in four months, following a summit between U.S. President Donald Trump and Japanese Prime Minister Shigeru Ishiba. The meeting sparked uncertainty regarding Nippon Steel’s plans to acquire U.S. Steel Corp. After the summit, it was revealed that Nippon Steel might instead make a significant investment in the U.S. steelmaker, surprising investors who had expected a full acquisition.
The potential shift from a $14.1 billion buyout to an investment represents a major deviation from Nippon Steel’s original strategy. The companies had first announced the acquisition deal in December 2023 and spent the following year navigating regulatory and political obstacles. However, the deal was blocked by former President Joe Biden in January due to national security concerns, with critics arguing that the decision was politically motivated.
Despite the attention around the summit, details on what an investment would entail remain unclear. Neither Trump nor Ishiba provided specifics on the potential structure of an investment, leaving market participants uncertain about the future of the deal. Both companies have not yet commented on the possibility of an investment.
“There’s insufficient clarity for the market to assess the outlook of the U.S. Steel deal,” said Ryunosuke Shibata, an analyst at SBI Securities Co. “It seems unlikely that a complete takeover will occur, which means Nippon Steel might avoid paying the full 2 trillion yen for the deal. Trump’s suggestion of an investment only adds to the uncertainty, as the details are still unclear.”
The selloff in Nippon Steel shares could also reflect profit-taking, as the company’s stock had surged earlier in the week on the back of positive earnings reports. Analysts believe that a full acquisition would have been more beneficial for Nippon Steel, as it would allow the company to transfer its technology and resources directly to U.S. Steel.
Before the summit, Nippon Steel executives had expressed optimism that Trump might reverse his predecessor’s decision, but Trump reiterated his opposition to the deal last week, stating that he has no interest in allowing U.S. Steel to be owned by a foreign entity. “I don’t want U.S. Steel being owned by a foreign country,” Trump told reporters on Sunday. “All they can have is an investment.”
For investors, the next steps remain uncertain, especially regarding how any investment in U.S. Steel would affect Nippon Steel’s earnings and whether there would be any financial consequences for terminating the acquisition. Analysts at SMBC Nikko Securities Inc., Atsushi Yamaguchi and Takuya Maeda, emphasized that more information is needed to gauge the impact of the potential investment on Nippon Steel’s future.
Nonetheless, the analysts concluded that while the deal remains on hold, the statements made by Trump and Ishiba during their summit may signal a step forward in the ongoing discussions.
Related topics:
Korea Gas Corp. Shares Drop 15% After Disappointing Offshore Drilling Results
Amazon to Invest Over $100 Billion in AI Infrastructure in 2025
Cerebras and Mistral Set AI Speed Record with Groundbreaking Partnership
