U.S. Steel’s stock price never reached the $55 price point Nippon Steel proposed to buy the company in December 2023, in a cross-border partnership that drew ire from politicians and steelworkers alike. It was trading around $32 this week. So outgoing President Joe Biden’s decision to abandon the agreement on national security grounds is, in some ways, already old news.
But there are also new things. It’s a scramble to understand the rules of mergers and acquisitions. Many business advisers had predicted a relatively strong 2025, helped in part by President Donald Trump’s more pro-business policies. The reality may be more complicated.
So far, there are signs that bigness itself is no longer a bad thing. The Biden administration has made no secret of its skepticism toward companies like Amazon that dominate the sector. In recent years, it has taken twice as long to close deals of $10 billion or more in the U.S. as it did 10 years ago, according to Goldman Sachs.
The Trump presidency has seen a simpler view of antitrust law, focusing on traditional concepts of consumer welfare and less on competition for employees and the impact on other stakeholders. There is a possibility of a retreat. Bank of America chief Brian Moynihan and Goldman Sachs chief David Solomon both believe the M&A market will be more favorable in 2025 thanks to the new occupant of the White House. I expect it to be.
However, even though market power is not necessarily a deal breaker, it is still possible for foreigners to do so. Both Mr. Biden and Mr. Trump opposed Nippon Steel’s acquisition of U.S. Steel. It’s not clear whether that was reasonable. Japanese companies were offering all kinds of concessions, including giving nearly $100 million in bonuses to U.S. employees and keeping their Pittsburgh headquarters. Life is not easy for small and medium-sized steel manufacturers.
If President Trump is suspicious of acquisitions with foreign buyers, that logic may not apply to the domestic situation. Putting America first means not fostering or maintaining giant corporations that can kick sand in the faces of foreign rivals, such as Google’s parent company Alphabet, semiconductor maker Nvidia, and megabank JP Morgan. is difficult. This will be difficult to do while maintaining a hostile view of the tax burden on domestic companies.
A key test will be the technology sector. Changes at top regulators, such as the appointment of hawkish academic Lina Khan as chair of the Federal Trade Commission, suggest a more benign but less flexible approach. Your new broom may soon reach its limits. The so-called Magnificent Seven, which includes Apple, Microsoft and Facebook owner Metaplatform, is sitting on $530 billion in cash, burning a hole in its balance sheet.
Meanwhile, U.S. Steel could be a test of what happens to the loser. Domestic rival Cleveland-Cliffs had previously expressed interest in a domestic M&A solution. President Trump has suggested that companies could be protected in other ways through tariffs and taxes, but these interventions would make the merger calculation even more slippery. Trading may become more frequent in 2025, but not necessarily simpler.
john.foley@ft.com
