Nippon Steel shares down after US government blocks U.S. Steel purchase

TOKYO: So, here’s the scoop. Nippon Steel’s shares took a hit, dropping over 1% on Monday. This came right after President Biden decided to block their big $14.9 billion deal to buy U.S. Steel. Not great news for Japan’s biggest steelmaker, right?

Biden’s reasoning? National security concerns. This decision could really put a damper on Nippon Steel’s growth plans, especially after a year of waiting and hoping for approval.

Interestingly, the drop in Nippon Steel’s stock wasn’t as bad as it could have been. Investors had already been bracing for this news, and U.S. Steel’s shares were trading lower than the offer price.

On Monday morning, Nippon Steel shares were at 3,151 yen, while the broader Topix index only fell by 0.3%. They had closed at 3,182 yen on the last trading day of 2024, just before the New Year holiday.

Even though Biden blocked the deal, Nippon Steel and U.S. Steel haven’t officially called it quits yet. They released a joint statement saying they think Biden’s decision is “unlawful” and are considering their options to protect their rights.

If the deal doesn’t go through, Nippon Steel will have to pay U.S. Steel a hefty $565 million break fee. Plus, they’ll need to rethink their strategy for growth outside of Japan.

The goal was to boost their global steel production from 65 million tons to 85 million tons a year, getting closer to their long-term target of 100 million tons.

There’s also talk that Nippon Steel might sue the U.S. government over this decision. Their president, Tadashi Imai, mentioned that they feel the review process wasn’t handled properly and that they deserve a fair review.

Imai hinted that they wouldn’t take long to announce their next steps. A spokesperson for Nippon Steel said they plan to hold a press conference soon to discuss the situation, but the date is still up in the air.