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Shares of US Steel have not yet reached the $55 that Nippon Steel offered to buy the company in December 2023, with cross-border ties that have sparked conflicts between politicians and steel workers. This week they were selling for about $32. So in a way, the decision of the President who gives birth to Joe Biden to squash the deal for reasons of national security it is now old news.
But there is also something new: the trick is to understand the rules of the road for mergers and acquisitions. Many business consultants expected that 2025 will be one party, helped by the trade presidency of Donald Trump. The reality can be more complicated.
So far, the signs are that growth is no longer bad, per se. The Biden administration did not hide its suspicions of companies that were strong in their field, such as Amazon. Red tape abounds: in recent years, US deals worth more than $10bn have taken twice as long to close as a decade ago, according to Goldman Sachs.
The Trump era could see a shift back to a more simplistic way of looking at dishonesty, focused on traditional considerations of consumer welfare – and taking into account things like labor competition or impact on other stakeholders. Bank of America CEO Brian Moynihan and Goldman Sachs CEO David Solomon both predicted a friendlier M&A market in 2025 thanks to a new occupant of the White House.
But if market forces aren’t necessarily destructive, being foreign still can be. Both Biden and Trump opposed Nippon’s takeover of US Steel. It’s not clear what made sense: the Japanese company had offered all sorts of deals, including about $100mn in bonuses for US workers and keeping the company’s headquarters in Pittsburgh. Life is not good for the lowly metal worker.
If Trump is suspicious of taking goods and customers abroad, such thinking is unlikely to work in the domestic sphere. Putting America first is hard to do without growing — or supporting — big companies like Google parent Alphabet, chipmaker Nvidia or mega-bank JPMorgan that can kick sand in the faces of foreign rivals. It’s hard to do that when we have negative feelings about the sadness of the home company.
A key test will be the technology sector. Personnel changes at the top — hawkish academic Lina Khan as head of the Federal Trade Commission, for example — suggest a light but not easy approach. New brooms may be added soon: the so-called Magnificent Seven, which includes Apple, Microsoft and Facebook owner Meta Platforms, have $ 530bn of money burning a hole in their balance sheets.
Meanwhile, US Steel could be a test of what happens to the losers. His rival Cleveland-Cliffs had previously shown interest in local M&A solutions. Trump has suggested he could protect the company in other ways, using tariffs and taxes — measures that make the partnership’s numbers slip even further. Doing things may become more frequent in 2025 but it is not necessarily easier than that.
