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(Bloomberg) -- After more than 17 months of lobbying and close-fought negotiations to secure control of United States Steel Corp., Japan’s Nippon Steel Corp. appeared on Friday to have received a presidential blessing.
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Days later, however, investors, executives and diplomats are still unsure of what exactly the US president endorsed.
Donald Trump heralded a “planned partnership” between the two industrial heavyweights, claiming it would create “at least 70,000 jobs” — roughly five times US Steel’s current American employees — and add $14 billion to the US economy. But his unexpected announcement stopped short of explicitly endorsing Nippon Steel’s proposed $14.1 billion cash takeover of US Steel, instead asserting that the company would “remain in America.”
Speaking on Sunday, he provided little additional clarity.
“It’ll be controlled by the United States, otherwise I wouldn’t make the deal,” Trump told reporters at Morristown Airport in New Jersey, as he headed back to Washington. “It’s an investment and it’s a partial ownership but it’ll be controlled by the USA.”
Japan’s Chief Cabinet Secretary Yoshimasa Hayashi said on Monday that the government was awaiting a formal announcement.
The two companies, left to grapple with ambiguity, publicly praised the “partnership” and a “bold” decision on Friday. Neither has since commented on specifics, or elaborated. US Steel shares closed more than 21% higher on Friday anyway — after surging as much as 26% — signaling renewed investor hope around the acquisition.
Nippon Steel surged as much as 7.4% in trading in Tokyo on Monday, buoyed by similar optimism around the benefits of what may follow, and the potential for reduced dependence on a waning Japanese market. Shares have since pared tje gains and were up just over 2% at 11:10 a.m. local time.
Analysts warned that the scale of the deal and additional investments were not positive for Nippon Steel’s earnings in the short-term.
“It could drain funds that could be used for capital expenditure and lifting shareholder returns,” said Kensuke Togashi, chief strategist at Daiwa Asset Management. “I suspect today’s reaction reflects the market’s low expectations.”
Trump, whose verdict is the last step in the process of determining whether Nippon Steel’s purchase can go ahead, had previously expressed support for Japanese investment in US Steel, but opposed a full takeover. Writing on social media in December, he said that he was “totally against the once great and powerful US Steel being bought by a foreign company” — a rare area of alignment with predecessor Joe Biden, who blocked the deal in January, following a review by the Committee on Foreign Investment in the United States.