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Japan’s Nippon Steel Corporation (NSC) announced the acquisition of the United States Steel Corporation (U.S. Steel) for $14.9 billion. The all-cash transaction, valued at $55 per share, is expected to diversify Nippon Steel’s global footprint significantly and bolster its annual crude steel capacity to 86 million tons. The Japanese steel maker is currently the fourth largest in the world.
The announcement follows unanimous approval from the boards of directors at both U.S. Steel and Nippon Steel and is slated to close in the second or third quarter of 2024, pending regulatory approvals.
This move comes after U.S. Steel rejected a $7.3 billion buyout proposal from rival Cleveland Cliffs in August, making Nippon Steel’s offer more than double the previous bid. Other players in the industry also showed interest in the acquisition of US Steel but were unsuccessful.
The acquisition will see U.S. Steel retaining its name, brand, and headquarters in Pittsburgh, Pennsylvania, where it was founded in 1901 by JP Morgan and Andrew Carnegie.
Clean Steel
Both companies share a common goal of decarbonization by 2050, emphasizing sustainability as a fundamental pillar of their operations. Nippon Steel President Eiji Hashimoto expressed enthusiasm about the transaction, vowing to make an environmentally safe company for the future of the planet.
“We are excited that this transaction brings together two companies with world-leading technologies and manufacturing capabilities, demonstrating our mission to serve customers worldwide, as well as our commitment to building a more environmentally friendly society through the decarbonization of steel,” Hashimoto said.
David B. Burritt, President and CEO of U.S. Steel, highlighted the benefits for the U.S., stating that the announcement ensures a competitive domestic steel industry while strengthening the company’s global presence.
Union Issues
United Steelworkers union is reportedly against the deal since it is not sure if current agreements will be honored by the acquirer. Nippon Steel made it clear that it will honor all agreements with U.S. Steel’s employees, including existing collective bargaining agreements with unions. Nippon Executive Vice President Takahiro Mori said the company had a good history with unions.
“Standard Steel and Wheeling Nippon Steel that we own are unionized companies in the United States; we have a good history of working with unions. We see no regulatory or antitrust issues with the deal,” Mori said.
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