Japan’s Nippon Takes Over U.S. Steel

After months of bidding, U.S. Steel finally has a buyer. However, the auction’s winner has some parties concerned. 🤔

Japan’s Nippon Steel emerged as the top bidder for the 122-year-old steelmaker, beating out offers from Cleveland-Cliffs, ArcelorMittal, and Nucor. Its $55 per share price represents a 142% premium to where $X shares were trading before Cleveland-Cliffs’ $35-per-share offer kicked off the bidding war.

It’s a significant bet that the Biden Administration’s infrastructure bill will create spending and tax incentives that greatly benefit U.S. steel. It’ll also help Nippon, the world’s fourth-largest steel maker, ramp up its global crude steel production capacity toward 100 million metric tons. 🏭

Some analysts say Nippon is overpaying for U.S. steel at 7.3x its 12-month EBITDA when the industry average is 7x. However, Nippon said synergies will come from pooling production technology and methods of product development, operations, energy savings, and recycling.

While U.S. Steel shareholders are happy with the high bid, not all parties are excited about the deal. Although Nippon said all of U.S. Steel’s commitment to its employees will remain in place, the United Steelworkers union does not have confidence that is true. 😟

It said it’s planning to fight hard for its members’ benefit, saying, “We will exercise the full measure of our agreements to ensure that whatever happens next with U.S. Steel, we protect the good, family-sustaining jobs we bargained.”It is also exploring other remedies, given that the deal may have violated its partnership agreement because neither party contacted the union regarding the sale.

It’s unlikely that anti-trust concerns will stop the deal because Nippon has such a small footprint in North America. However, the U.S. government could pose a challenge given a foreign entity is taking control of critical American assets needed for the electric vehicle industry, broader infrastructure projects, and more. In a presidential election year, everything is on the table, which could prove to be a wildcard for the deal. 🃏

For now, $X shares are trading about 11% below the proposed deal’s share price to reflect that uncertainty. With shares at 12.5-year highs, most shareholders are sitting pretty on their profits right now. We’ll have to wait and see if they get their last 11% or if the deal falls apart. 🤷

AI’s Copyright Crisis Begins

We all knew copyright law would be a key issue at the heart of the artificial intelligence (AI) revolution, but we didn’t know when. Well, the time has come. ⌛

Today, The New York Times filed a lawsuit against Microsoft and OpenAI, accusing them of infringing copyright and abusing the newspaper’s intellectual property. In its court filing, the publisher said it looks to hold the two companies accountable for the “unlawful copying and use of The Times’s uniquely valuable works,” claiming billions in statutory and actual damages.

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Adobe Leads Day Of Breakups

Most of today’s stories were related to hookups in the market, but we also need to touch on some major breakups. 💔

The first and most prevalent news story was that Adobe and Figma have called off their $20 billion acquisition. The two companies have faced intense scrutiny from European regulators, today saying, “There is no clear path to receive necessary regulatory approvals from the European Commission and the U.K. Competition and Markets Authority.”

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A Chip Off The Holiday News Flow

It’s a slow week in the market, but as usual, there’s some news out of the semiconductor space. Let’s take a look. 👀

First up is Israel granting Intel $3.2 billion to support the company’s biggest investment in the country. Intel will not only build a $25 billion factory that creates thousands of jobs but will also buy $16.6 billion in goods and services from Israeli suppliers over the next decade. It is anticipated that the plant will open in 2028 and operate through at least 2035. 🏭

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Musk Threatens Tesla’s AI Ambitions

The primary bull case for Tesla is that it’s not an automobile company but a technology one. Part of the reason it’s able to command such a high valuation relative to its peers is because of that technology’s potential business impact way down the line, especially as it introduces newer developments like artificial intelligence (AI).

However, that bull case is facing an unlikely opposition…from Elon Musk himself. 🤦

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