US Steel, NSC remain silent on merger

The structure of a newly proposed United States Steel and Nippon Steel partnership has yet to be unveiled by either company.

steel molten bucket
The final outcome of a merger proposal that has been on hold for nearly 18 months has yet to be determined.
Photo courtesy of United States Steel Corp.

It has been more than two weeks since President Donald Trump’s May 23 social media post indicating his administration had brokered a “planned partnership” between United States Steel Corp. and Nippon Steel Corp. (NSC), and more than 10 days since he held a follow-up rally May 30 in U.S. Steel’s headquarters city of Pittsburgh.

In the ensuing time, neither U.S. Steel nor Japan-based NSC has released statements adding clarity or providing additional details about the arrangement.

The lack of communication by both firms is more reminiscent of a “quiet period” that can occur between the time two companies announce a merger and before shareholders or regulators have approved the transaction.

On May 23, the same day as the president’s social media post, U.S. Steel released a three-sentence statement thanking and complimenting Trump, adding, “U.S. Steel will remain American, and we will grow bigger and stronger through a partnership with Nippon Steel that brings massive investment, new technologies and thousands of jobs over the next four years.”

Follow up reporting from global media outlets included a comment from U.S. Sen. David McCormick of Pennsylvania, who told reporters the federal government would gain a U.S. Steel corporate governance stake in the process, with some media reports calling it a “golden share” that carries a deciding vote aspect on some company matters.

The only news release posted by U.S. Steel since May 24 came June 4 in announcing a new podcast series created by the steelmaker. That news release does not refer to the pending merger.

On the NSC website, only one news release has been issued by the company since the May 23 presidential social media post, and it relates to a sizable investment being made by NSC in its home country.

On May 30, the same day Trump was speaking in Pittsburgh, NSC announced it was investing $6 billion to expand recycled-content electric arc furnace (EAF) steel production at three locations in Japan. NSC will accept an additional $1.75 billion in Japanese government funding to complete those projects.

The company’s project to to "significantly reduce" emissions in Japan could be seen as standing in contrast with its intention to invest $1.3  billion to upgrade production at two higher emissions blast furnace/basic oxygen furnace complexes (in Indiana and Pennsylvania) if it acquires U.S. Steel.

One steel company executive contacted by Recycling Today believes the merger will proceed, and says attorneys and executives are in the process of “dotting the i’s and crossing the t’s” to finalize the agreement.

The notion of a “golden share,” however, raises the question of whether the agreement approved in previous votes and decisions by shareholders and regulators in the U.S., Japan and Europe (where U.S. Steel has operations) will apply to a new arrangement that now includes the U.S. government in the landscape.

NSC documents pertaining to the 101st General Meeting of Shareholders, which NSC will hold in Tokyo on June 24, do not indicate a second shareholder vote is on the agenda. However, the agenda, released May 28, and some follow-up amendments released June 2, refer to three shareholder proposals pertaining to executive compensation or the oversight of company subsidiaries.

Two of the proposals question the use of certain tools used to measure or bolster executive compensation while the other proposes greater oversight of NSC subsidiaries that have separate listings on stock exchanges. The board of directors has recommended shareholders vote against all three proposals.

In the full 104-page shareholder meeting agenda, considering the magnitude of the proposed transaction, references to the pending merger are not widespread.

In one case, a potential review of executive compensation is mentioned in the event that U.S. Steel or other large acquisitions materialize in the future. Another mention occurs in a chart displaying the U.S. Steel acquisition as one step in NSC’s overall path to reach 100 million tons per year of annual steelmaking capacity.

There are at least two stakeholders in the transaction that have been willing to comment on the Trump-related developments affecting the merger.

“This deal means U.S. Steel will expand its workforce in the region, modernize its facilities and continue to operate its headquarters in the Pittsburgh region," says Stefani Pashman, CEO of the Allegheny Conference on Community Development (ACCD), an economic development organization based in Pittsburgh. "We can now unify around the company’s bright future, benefiting from the expertise, innovation and investment Nippon will bring to our region.”

Pashman credits Trump, McCormick and Pennsylvania Gov. Josh Shapiro for their roles in the arrangement.

Sounding less pleased with recent developments is David McCall, international president of the United Steelworkers (USW) union, who issued a statement May 30.

“We have not participated in the discussions involving U.S. Steel, Nippon Steel and the Trump administration, nor were we consulted, so we cannot speculate about the meaning of the ‘planned partnership’ between U.S. Steel and Nippon or the ‘golden share’ that some politicians have claimed will be issued to the federal government,” he says.

When rival steelmaker Cleveland-Cliffs disclosed in August 2023 that it was making a bid to acquire U.S. Steel, CEO Lourenco Goncalves made a concerted effort to recruit the USW as an ally for its bid.

The Cleveland-based iron mining and steelmaking firm said it had gained receipt of the assignment of the USW “right to bid” under its Basic Labor Agreement with U.S. Steel Corp.

“With this exclusive assignment, Cliffs is the only realistic buyer able to acquire the totality of U.S. Steel,” the company said at the time.

An August 2023 letter from the late then-USW President Thomas M. Conway to Goncalves read in part, “The Union’s Basic Labor Agreement with U.S. Steel includes [the] right to transfer or assign its rights to another person or entity. By this letter, the union transfers and assigns to Cleveland-Cliffs the Union’s Right to Bid. The union’s transfer and assignment only applies to Cleveland-Cliffs.”

It has been only 16 days since Trump’s social media post and less than a dozen since his rally, and confirmation and details regarding the administration-brokered deal may yet be forthcoming.

In the meantime, whether shareholders, regulators, employees and other parties affected by how the latest iteration of the deal is constructed are as enthusiastic as Trump remains to be seen.