Nippon Steel, Japan’s leading steel company, has agreed to acquire United States Steel Corporation (NYSE: X) for a staggering $15 billion. The deal, announced on Monday, sent U.S. Steel shares soaring by 26.37% to $49.70 in early trading.
Nippon Steel has committed to pay $55 per share, totaling around $14.1 billion, representing a nearly 40% premium over U.S. Steel’s closing price on Friday. The overall deal, including debt, values U.S. Steel at around $14.9 billion. This strategic move grants Nippon Steel, the world’s fourth-largest steel company, a significant foothold in the largest economy globally.
United States Steel (NYSE: X) has been undergoing a strategic review of its operations since early August and has rejected offers from U.S. rival Cleveland-Cliffs (NYSE: CLF) and privately held Esmark, both valuing the company at around $7.85 billion. France’s ArcelorMittal (NYSE: MT) was also reportedly interested in the acquisition.
U.S. Steel CEO David Burritt expressed confidence in the deal, stating, “NSC has a proven track record of acquiring, operating, and investing in steel mill facilities globally – and we are confident that, like our strategy, this combination is truly best for all.”
However, the U.S. Steel-Nippon Steel pact faces challenges, particularly from the United Steelworkers Union (USW). Although Nippon Steel has pledged to uphold existing agreements with the United Steelworkers Union regarding wages and working conditions, the union expressed strong criticism, accusing both U.S. Steel and Nippon of a “greedy, shortsighted attitude.”
The USW highlighted that neither company consulted them regarding the deal, citing a violation of their partnership agreement. The union also expressed concern about Nippon Steel’s understanding of existing obligations, including labor agreements, pension funding, and retiree insurance benefits, which are the most extensive in the domestic steel industry.
The acquisition may face legal and political hurdles as well. Senator J.D. Vance (R-Ohio) previously urged U.S. Steel to sell to an American buyer, citing potential impacts on the country’s industrial base and national security. Vance insisted on rejecting bids from foreign entities.
The Committee on Foreign Investment in the U.S. (CFIUS) is also expected to scrutinize the deal, particularly since the company could benefit from taxpayer funds linked to the Inflation Reduction Act.
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