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Japan’s Nippon Steel has said it could issue equity to fund billions of dollars of promised investment in US Steel, after its nearly $15bn takeover of its American rival closed following a year of political wrangling.
US President Donald Trump approved the tie-up last week, months after his predecessor Joe Biden moved to block the deal. Nippon Steel clinched Trump’s approval after pledging to invest $11bn in the Pennsylvania-based company by 2028 — four times what it had initially promised.
The Japanese company also handed the government a “golden share” in US Steel, which gives the US government final say on a host of possible business decisions, including moving jobs outside the US and closing plants.
“We cannot rule out the possibility of a capital raise,” said vice chair Takahiro Mori, the key deal negotiator, at a press conference in Tokyo on Thursday. “Given the massive amount of capital required, it’s certainly something we are keeping in mind.”
He added the steelmaker would look to avoid options that could dilute existing shareholders, without providing more details.
Analysts at investment bank Jefferies downgraded Nippon Steel this week, estimating an equity increase of ¥300bn to ¥500bn ($2.1bn to $3.5bn) would be needed.
US Steel’s base in the electoral swing state of Pennsylvania, its historic role in American industry, and the thousands of jobs at stake made the $14.9bn deal a subject of intense debate during the 2024 US presidential election campaign.
The Japanese steelmaker has committed to keeping US Steel’s Pittsburgh headquarters and has promised that a majority of US Steel’s board of directors will be US citizens, including its chief executive.
Nippon Steel’s chief executive Eiji Hashimoto told the press conference that the deal had been made possible “by the alignment of our company’s desire to fully expand our business in the US with the government’s goal of revitalising its manufacturing sector, including against China”.
Hashimoto denied that the golden share would restrict management’s freedom and said the terms marked a “new normal” of government intervention in global deals, due to geopolitics and decarbonisation.
“I believe the series of measures taken by the Trump administration in this case is not a special one-off but is driven by a new, rising international trend,” he said.
Nippon will also book a ¥230bn loss on the sale for $1 of a joint venture steel plant in Calvert, Alabama to ArcelorMittal, carried out to address antitrust concerns.
