Japan’s Nippon Steel to Acquire US Steel in $14.9 Billion Deal

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Japan’s Nippon Steel has announced its plans to acquire U.S. Steel in a deal worth $14.9 billion, including debt. This move comes after U.S. Steel put itself up for sale earlier this year. The per-share offer of $55 represents a premium of about 40% to U.S. Steel’s Friday’s closing price and a significant increase compared to the stock’s closing price before the company announced a strategic review process in August.

A Strategic Move in a Declining Market

Nippon Steel, the world’s fourth-largest steelmaker, sees the United States as a growth market that can offset declining demand in Japan. By acquiring U.S. Steel, Nippon aims to secure a stronger position in the global steel industry. The company has already secured financing commitments for the deal and expects it to contribute to its goal of reaching 100 million tonnes of global crude steel capacity.

Job Security and Commitment to Employees

Nippon Steel has reassured U.S. Steel employees that all commitments, including collective bargaining agreements with unions, will be honored. This commitment ensures job security for the workforce and continuity in operations.

United States Steel Edgar Thompson Works
Image: United States Steel Edgar Thompson Works in Braddock, Pennsylvania. (DOMINICK REUTER/AFP via Getty Images)

A Promising Outlook for U.S. Steel

Pittsburgh-based U.S. Steel has faced challenges in recent years, with falling revenue and profit. However, the company remains an attractive takeover target for rivals looking to expand their presence in the steel industry, particularly in the automotive sector. U.S. Steel supplies steel to the automobile and renewable energy industries and stands to benefit from incentives provided by the Inflation Reduction Act (IRA) for renewable energy projects.

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Striking United Auto Workers (UAW) union workers picket
Image: Striking United Auto Workers (UAW) union workers picket outside the Ford Michigan Assembly Plant. (REUTERS/Dieu-Nalio Chery/File Photo / Reuters Photos)

Financial Advisors

Citi is serving as the financial advisor to Nippon Steel for this acquisition, while Barclays Capital, Goldman Sachs, and Evercore are the financial advisors to U.S. Steel.

Business Today will continue to monitor this development closely. For the latest updates on the business world, visit Business Today.