If a company plays the long game, then it will often accept what appears to be unusual conditions, because it is looking down the road 20 years from now. If you examine the US, infrastructure is getting old and with budget deficits many improvements were put off. At some point, many bridges will need to be rebuilt, and they will need steel. The demand for steel will grow out of necessity.

Nippon Steel wanted in and the easiest way in was to buy an existing company. The Board of Directors agreed to the sale, then came politics. The 2 people running for President were older gentleman and they remember something of the strength of steel making in the years gone by. Technology has changed how steel is made, so companies that had not updated their mills for various reasons were falling behind.

In an article by Alexandra Alper of Reuters, Nippon Steel $14.9 billion acquisition of US Steel closed with Nippon Steel buying 100% of the shares for $55 a piece.

During the political season, the politicians were saying, US Steel has to stay American owned. They compromised and Nippon Steel has agreed to allow President Trump to appoint a Board member through a golden share which gives the government veto authority over corporate decisions such as idling plants, to cutting production capacity and moving jobs overseas. Nippon Steel had committed to keeping US Steel’s headquarters in Pittsburg and the government has a veto over moving headquarters.

Nippon will be investing in the plant including a $1 billion for a new mill which will increase to $3 billion by 2028. Nippon Steel whose specialty is high grade steel, expects demand to increase across the US.

US Steel’s union the United Steelworkers was against the deal and will be watching Nippon Steel.

Linking to dividend paying stocks, Nippon Steel is looking outwards and they are aware the investments in US Steel depend on the economy and being seen as an American company to win contracts for made in America products. They are also aware, that politics will move to different interests in the years ahead and as long as the demand is in the economy they can easily work with the politicians.

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