Renta 4 | The US government is expected to give the green light to Nippon Steel’s “buyout” of US Steel. The deal could be announced tomorrow, Friday, during a visit by Trump to Pittsburgh.
Many details of the deal are still unknown, although it is clear that the government will impose severe restrictions on Nippon.
Among them, the government would maintain a “golden share”, a remedy sometimes used by European governments and very rarely in the US. The initial offer ($55/share in cash) for $14 billion would be maintained. It is believed that the government will retain veto power on issues such as steel production, approval of board members, layoffs and others.
Trump will have to find a formula for the operation to go ahead after the outgoing president, J. Biden, blocked this operation in January, citing national security issues.
We recall that Arcelor Mittal and Nippon Steel share Calvert, a 50/50 JV that they founded in 2014 in Alabama and that in order to facilitate the purchase of US Steel, AM and Nippon Steel signed an agreement in October 2024 whereby the former could buy 50% of Calvert owned by Nippon Steel for €1. Nippon Steel would also inject cash and forgive loans totalling around $900 million.
Assessment: We believe the deal is very favourable for ArcelorMittal as it acquires the remaining 50% of a mill considered the most advanced in the finishing segment in North America. It has a production capacity of 5.3 mt of hot rolling mills and at the end of 2024 it completed the construction of a new electric EAF with a capacity of 1.5 mt (with an option to expand by another 1.5 mt).
We estimate that this deal will have an initial impact on the equity valuation of almost $1,400 million or almost €1.60/share. P.O. €34.0. OVERWEIGHT.
