Trump’s backing for Nippon’s US Steel bid leaves key questions unanswered

Written by Marico Katsomora and Yuka Obishi

TOKIO (Reuters) -president Donald Trump’s comments, which supports Nippon Steel, for $ 14.9 billion for the United States, left remaining questions about the scope of the deal and its costs for the Japanese company, which led to silent gains for its shares on Monday.

As part of the deal announced on Friday, Trump said in a post on the social truth that the “planned partnership” between the two companies will create at least 70,000 jobs and add $ 14 billion to the US economy.

He added that the largest part of this investment will happen in the next 14 months and said that he will carry a mass in the United States in Pittsburg on Friday.

Trump said on Sunday that the United States will control the American steel as part of the partnership.

It is still unclear whether the “partnership” indicates the full acquisition of the Nippon Steel. The White House did not answer questions about the advertisement on Friday.

The US hard shares increased by 21 % on Friday to $ 52.01, as investors interpreted Trump’s comments, who originally opposed the deal, that Nippon Steel had obtained his approval for its long -standing acquisition, which is the last big obstacle to the deal. But stocks are still less than $ 55 per share offered by Nippon, reflecting uncertainty about a deal.

Nevertheless, the United States praised Steel and Nippon Steel, with Trump’s comments on Friday.

For Nippon Steel, the best steel maker in Japan, the deal is essential for its global expansion strategy. Production will be raised to 86 million metric tons from 63 million tons now – at a time when domestic demand decreases.

“The benefits of reaching the growing American market are enormous,” said Masyuki Kopotta, the chief strategy at the Rakin Securities Institute for Economic Research.

He said: “Although the company is the leading technology company, the local market is saturated, the competition is fierce in Asia, and the company’s growth strategy has turned into an angle,” adding that Nippon can expect new growth in the United States by benefiting from its technological strength in high -quality steel.

Some analysts said that the costs of the deal were a source of concern.

“While the news is positive for the development of Nippon Steel’s business, the increase in spending is worrying,” said Heroiasu Mori, head of the OKachi Securities Investment Office.

Nippon shares, the fourth largest steel maker in the world, increased by 7.4 % to 3,081 yen in Tokyo, but then wiped out a large part of the gains to 1.7 % by mid -afternoon.