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US Steel shares never reached the $55 level that Nippon Steel offered to acquire the company in December 2023, in a cross-border partnership that angered politicians and steelworkers alike. This week they traded at around $32. So, to some extent, it is the decision of outgoing President Joe Biden Crushing the deal For national security reasons it is already old news.
But there's something new, too: the scramble to understand the rules of the road for mergers and acquisitions. Many corporate advisers were anticipating 2025 to be a relative holiday, helped by a more business-friendly presidency of Donald Trump. The reality may be more complex.
So far, evidence suggests that big is no longer bad in and of itself. The Biden administration did not hide its skepticism towards companies that were dominant in its field, such as Amazon. Red tape abounds: In recent years, US deals worth more than $10 billion have taken twice as long to close as a decade ago, according to Goldman Sachs.
Trump's term could see a decline to a more simplistic way of viewing antitrust, focusing on traditional notions of consumer welfare — and paying less attention to things like competition for employees or the impact on other stakeholders. Bank of America Chairman Brian Moynihan and Goldman Sachs Chairman David Solomon both forecast a kinder market for mergers and acquisitions in 2025 thanks to the new occupant of the White House.
But if market strength isn't necessarily a deal breaker, foreigners may still be. Both Biden and Trump opposed Nippon's acquisition of US Steel. That was clearly not rational: The Japanese company offered all sorts of perks, including nearly $100 million in bonuses to American employees and keeping its corporate headquarters in Pittsburgh. Life is not fun for a steel sub-maker.
If Trump is skeptical of acquisitions with foreign buyers, this logic is unlikely to apply to the domestic scene. It is difficult to put America first without the sponsorship — or the sustainability — of corporate giants like Alphabet, Google's parent company, chipmaker Nvidia, or megabank JPMorgan, which can kick sand in the faces of foreign rivals. This, in turn, is difficult to do while maintaining a hostile view on the aggrandizement of local companies.
The main test will be the technology sector. Staff changes at top regulators — for example, hawkish academic Lina Khan as head of the Federal Trade Commission — suggest a more moderate, but not malleable, approach. New brooms may be being tested soon: The so-called Magnificent Seven, which includes Apple, Microsoft, and Facebook owner Meta Platforms, has $530 billion of cash burning a hole in their balance sheets.
Meanwhile, US Steel could serve as a test of what happens to the losers. Its local competitor, Cleveland-Cliffs, had previously expressed interest in a local M&A solution. Trump has suggested he could protect the company in other ways, using tariffs and taxes — interventions that make merger calculations more complex. Deal making may become more frequent in 2025, but it will not necessarily be simpler.
