July 20th, 2024

Storied US Steel to be acquired for more than $14 billion by Nippon Steel

By Michelle Chapman, The Associated Press on December 18, 2023.

U.S. Steel, the Pittsburgh steel producer that played a key role in the nation’s industrialization, is being acquired by Nippon Steel in an all-cash deal valued at approximately $14.1 billion.

The transaction is worth about $14.9 billion when including the assumption of debt.

The deal’s announcement comes several months after U.S. Steel rejected a $7.3 billion buyout proposal from rival Cleveland Cliffs. U.S. Steel received the offer in August and said at the time that it was reviewing “strategic alternatives” after receiving several unsolicited offers. The company said it rejected the offer because Cleveland-Cliffs was pushing it to accept the terms without being allowed to conduct proper due diligence.

Soaring prices have helped fuel consolidation in the steel industry this decade. Steel prices more than quadrupled near the start of the pandemic to near $2,000 per metric ton by the summer of 2021 as supply chains experienced gridlock, a symptom of surging demand for goods and the lack of anticipation of that demand.

Nippon, which will pay $55 per share for U.S. Steel, said Monday that the deal will bolster its manufacturing and technology capabilities. It will also expand Nippon’s production in the U.S. and add to its positions in Japan, India and the ASEAN region.

Nippon said the acquisition is anticipated to bring its total annual crude steel capacity to 86 million tons and help it capitalize on growing demand for high-grade steel, automotive and electrical steel.

“The transaction builds on our presence in the United States and we are committed to honoring all of U. S. Steel’s existing union contracts,” Nippon President Eiji Hashimoto said in a prepared statement.

U.S. Steel CEO David Burritt said that the deal is beneficial to the United States, “ensuring a competitive, domestic steel industry, while strengthening our presence globally.”

The deal, which was approved by both companies’ boards, is targeted to close in the second or third quarter of 2024. It still needs approval from U.S. Steel shareholders.

Shares of United States Steel Corp. soared more than 27% before the market opened Monday.

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