*

Co says equity investment and capital spending are

inseparable

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Merger agreement is starting point for U.S. gov't talks

(Recasts with details and quotes, adds bullets)

By Yuka Obayashi and Rocky Swift

TOKYO, Feb 25 (Reuters) - Nippon Steel ( NISTF ) plans to

use its current merger agreement to acquire U.S. Steel as

a starting point for talks with the U.S. government, President

Tadashi Imai said on Tuesday, as it aims to revive the deal.

Earlier this month, U.S. President Donald Trump, alongside

Japanese Prime Minister Shigeru Ishiba at the Oval Office, said

that Nippon Steel's ( NISTF ) $14.9 billion bid for U.S. Steel, which was

blocked by former President Joe Biden, would take the form of an

investment instead of a purchase.

Trump also said in mid-February that he would not mind if

Nippon Steel ( NISTF ) took a minority stake in U.S. Steel.

Imai, however, said that the Japan's top steelmaker's

current merger agreement with U.S. Steel will serve as a

starting point for discussions with the U.S. government

including Department of Commerce.

Equity investment and capital spending can not considered

separately, Imai said.

"Only by making an equity investment, we can make a major

(capital) spending decision," he said.

"We are about to start discussions with the U.S.

government," Imai said, adding that the Japanese company will

talk with the U.S. government about what it can do to get

President Trump's approval.

Nippon Steel ( NISTF ), the world's fourth-biggest steelmaker, made a

$14.9 billion bid for U.S. Steel in December 2023, ultimately

promising billions of dollars in investment to revamp its aging

infrastructure and pledging to keep its headquarters in

Pittsburgh, Pennsylvania.

The deal faced political headwinds from the start, with both

Trump and Biden vowing to kill the transaction in a bid to

appeal to voters in the election swing state of Pennsylvania,

and was blocked by the Biden administration over national

security concerns.

In January, the steelmakers asked the courts to reject the

block, saying Biden unfairly intervened in a national security

review to benefit himself politically, poisoning the process.

Nippon Steel's ( NISTF ) bid for U.S. Steel is central to the Japanese

company's global expansion plan.