By Svea Herbst-Bayliss
NEW YORK (Reuters) -Hedge fund Third Point owns a “meaningful” stake in U.S. Steel and expects a merger with Japanese rival Nippon Steel to go ahead.
Billionaire investor Daniel Loeb told investors in a letter seen by Reuters that the firm believes U.S. Steel “will complete a planned merger with Nippon Steel based on the industrial logic of the combination.”
Third Point’s stake has not been previously disclosed and comes at a time investors are trying to game out what lies ahead for the planned merger.
Loeb also said that Third Point sees new investment opportunities in credit markets that have been rocked by reaction to Trump administration policies, and had raised its investment in event-driven, activist and risk arbitrage positions that he expects to perform well in choppier market conditions.
While the Biden administration earlier in the year blocked the deal between the two steel companies, U.S. President Donald Trump last month ordered a new national security review, raising hopes some kind of deal may still be worked out.
Loeb wrote that a U.S. Steel tie up with Nippon would also have “benefits to ‘America First’ re-industrialization plans.”
Third Point is also building a position in consumer healthcare company Kenvue, which already has other activist investors pushing for changes, including some possible divestments or even a sale of the entire company.
(Reporting by Svea Herbst-Bayliss; Editing by Kirsten Donovan)
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