A deal between Nippon Steel and United States Steel Corporation (NYSE:X) is likely to move forward following comments from US President Donald Trump suggesting support for a “planned partnership” between the two companies, though analysts caution the details remain unclear.
Trump said the arrangement would create “at least 70,000 jobs” and add $14 billion to the US economy, noting that US Steel would remain headquartered in Pittsburgh.
He described the deal as a partnership, though Jefferies analysts believe the announcement points toward a full acquisition.
“The enthusiastic response from US Steel leads us to believe this is more than just a partnership,” Jefferies analysts wrote, adding that a merger with a US “golden share” to preserve national control could be part of the structure.
US Steel said in a statement Friday that it welcomed Trump’s remarks and remained committed to completing the transaction with Nippon.
The deal reportedly hinges on the completion of a national security agreement between Nippon and the Trump administration. Media reports also indicate Nippon plans to form a North American board with a majority of US citizens.
Jefferies said the partnership would likely support Trump’s industrial and economic goals, citing plans for foreign-funded revitalization of aging steel facilities and potential new investment, including a $4 billion mill in Pennsylvania.
“This is effectively the onshoring of old-economy manufacturing being funded by a foreign company,” Jefferies wrote, adding that the resulting increase in US steel output could lead to lower prices and, at the margin, lower inflation.
The firm warned, however, that the long-term implications may be negative for other US steel producers, especially as new entrants like Hyundai Steel also invest in domestic production.
Jefferies said the best-case scenario for US Steel shareholders remains a cash acquisition at $55 per share, but noted that a more complex structure could result in slightly less value.