Investing.com -- U.S. Steel (NYSE:X) shares edged up marginally by 0.1% after news emerged that Nippon Steel is considering a substantial investment in the company, including the construction of a new steel mill. The potential $14 billion investment plan, which could include up to $4 billion for the new facility, was disclosed in a document and confirmed by two individuals familiar with the situation, according to Reuters.
The investment by Nippon Steel, if approved by the Trump administration, would significantly bolster U.S. Steel’s infrastructure, with a total of $11 billion earmarked for development through 2028. This figure includes a $1 billion investment in a green field site, which is anticipated to increase by an additional $3 billion in subsequent years. The comprehensive investment proposal, which marks a considerable increase from the initial $1.4 billion, is part of a strategic move to gain approval for a merger that has faced scrutiny from both the Trump and Biden administrations.
The merger has been under a national security review, and the companies are facing a May 21 deadline to complete it. The review, which was previously blocked by Biden on national security grounds, could now hinge on the Trump administration’s decision, with a $565 million breakup fee at stake should the deal not proceed. Additionally, the current U.S. steel tariffs of 25% present a significant hurdle for accessing the lucrative American steel market.
The ambitious investment plan by Nippon Steel appears to be a concerted effort to win over regulatory approval, but it remains to be seen if the proposed billions in new investments will be sufficient to influence the decision-making process. U.S. Steel has not issued any comments regarding the matter, and neither Nippon Steel nor representatives from the White House or Treasury Department have responded to requests for comment at this time.
Investors reacted modestly to the announcement, with U.S. Steel shares showing a slight uptick, reflecting the cautious optimism surrounding the potential investments and their implications for the company’s future growth and market position.
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