There is song by Kenny Rogers called the Gambler and in it is the lines You have to know when to hold and know when to fold. When a merger is announced, the companies have agreed to a price and sometimes external events happen. The events can be elections or politics either at the national or local level. Sometimes the local event is seen to affect the national event and the local event becomes symbolic and repeatedly makes the national news. This was the case with US Steel.

In an article by Alexandra Alpher and Jarrett Renshaw of Reuters, US Steel needs an investment and were given one by Cleveland Cliffs but at a low level. Nippon Steel made an offer which the Board of Directors agreed to and all was good for US Steel. The Presidential elections were on and the two people running for President are of the age when they remember US Steel as an important force in the economy. There are multiple reasons why that has changed including use of technology by competing companies. However, US Steel was seen as an icon in the swing state of Pennsylvania which meant both candidates can out across any merger.

The Japanese Prime Minister visited President Trump and among things he did was lobby for Nippon Steel. The President agreed for an investment by Nippon Steel.

Nippon Steel was subject to a national security review which ended on May 21 and submitted new plans to invest $14 billion in US Steel including a new $4 billion steel mill.

Nippon increases the investment pledges from $1.4 billion to $2.7 billion and promised to keep the US Steel headquarters in Pittsburg. They had agreed to $565 million breakup fee with US Steel if the deal does not go through.

It seems President Trump will allow the deal to go through and the investment will become majority ownership.

Linking to dividend paying stocks, the good thing about dividend paying companies is they have a long-term horizon, which means they can wait till the politics goes down and will consider the investment for years. While it is wonderful if the savings and investment happen in 2 years, it may happen over 5 to 10 years and produce results for the next 25 years. Similar to individuals time horizon is important when you are investing.

There are more questions than answers, till the next time – to raising questions.