Hedge funds including Third Point and Pentwater Capital have secured major gains after US Steel’s $14.1bn sale to Japan’s Nippon Steel completed, bringing to a close one of the most politically charged and volatile merger arbitrage stories in recent years, according tp a report by Bloomberg.
After an 18-month saga marked by union opposition, two US administrations, and national security reviews, the deal’s successful closure rewarded funds that held steady amid the uncertainty. Dan Loeb’s Third Point reportedly holds a stake worth nearly $900m, having accurately predicted the transaction’s success in an April investor letter.
Pentwater Capital meanwhile, the largest hedge fund investor in US Steel, maintained a $1bn-plus position throughout the volatility. Others like Toms Capital and Westchester Capital Management are also reaping returns, the latter calling the merger “one of the wildest sagas” in risk-arbitrage history.
The drama saw US Steel shares fall to $27 — far below Nippon’s $55 per share offer — as political headwinds, including opposition from both President Biden and Donald Trump during the 2024 campaign, clouded the outcome. While Biden ultimately blocked the deal in January, President Trump reversed course after re-entering office, approving the deal following Nippon’s pledge to invest an additional $11bn into the US.
