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Nanako Sudo / The Yomiuri Shimbun Prime Minister Shigeru Ishiba, left, and U.S. President Donald Trump at the White House in Washington on Friday
Shunsuke Tanaka and Daisuke Ichikawa / Yomiuri Shimbun Staff Writers
21:00 JST, February 11, 2025
The issue of Nippon Steel Corp.’s planned acquisition of United States Steel Corp. might see some progress after Prime Minister Shigeru Ishiba and U.S. President Donald Trump reached an agreement in their latest talks.
The leaders agreed to make it “an investment, not an acquisition,” although the meaning of “investment” is not very clear.
In December 2023, Nippon Steel announced its plan to acquire U.S. Steel for about $14.1 billion (over ¥2 trillion), and U.S. Steel also approved the plan at an extraordinary shareholders meeting in April 2024.
However, the plan has been facing resistance in the United States. The acquisition became a political issue during the U.S. presidential election, and both Democrats and Republicans opposed it.
Nippon Steel sought to dispel concerns by increasing its investment and offering additional conditions.
The Japanese government has also provided support for Nippon Steel.
The Economy, Trade and Industry Ministry formed a handpicked team, which was headed by a vice minister, and kept requesting U.S. authorities to follow proper procedures in their screening for the acquisition. A study group, which was directly supervised by the prime minister, also worked on a strategy to win over Trump, prior to the Japan-U.S. summit meeting.
At the summit meeting, Ishiba reportedly told Trump that the deal would be an investment rather than an acquisition in order to gain his approval and apparently presented Nippon Steel’s proposal for additional investment.
Management rights
However, there are major differences between an acquisition and an investment.
Acquisition generally refers to a purchase of more than 50% of the shares of a company and taking control of its management. Nippon Steel’s aim of making U.S. Steel a wholly owned subsidiary would require the acquisition of 100% of the shares.
On the other hand, investment refers to providing funds and has a wide range of meanings. The amount of investment and whether managerial control can be obtained are decided on a case-by-case basis. Generally, the amount of investment is smaller than an acquisition, and managerial control is often not obtained.
Even if Nippon Steel were to reconsider its plan to make U.S. Steel a wholly owned subsidiary and only invest 50% or less, the company is “expected to be involved to a certain extent in management through the development of technology and expansion of sales channels,” said lawyer Hideo Horikoshi from Nishimura & Asahi.
Either way, Nippon Steel will have to greatly revise its plan.
Technology leak
Nippon Steel’s biggest fear is its advanced technology, which it plans to provide to U.S. Steel, being leaked.
The Japanese firm, for example, has developed technology related to electrical steel sheets that improves the performance of electric vehicles, and the material is expected to see huge demand. It is possible that such technology might be leaked in a situation in which Nippon Steel cannot fully control U.S. Steel’s management.
At a press conference, Trump did not explicitly state that he would overturn former U.S. President Joe Biden’s order to block the acquisition.
A Japanese government source said Trump might “keep demanding funding without approving the acquisition.”
