The iconic Pittsburgh steelmaker, U.S. Steel, has agreed to a buyout proposal from Japan’s Nippon Steel for a total value of $14.9 billion. The deal, unveiled on Monday morning, would make U.S. Steel a wholly owned subsidiary of Nippon Steel. The Japanese steel giant offers an all-cash transaction with a price of $55 per share, representing a 40 percent premium to U.S. Steel’s closing stock price on Friday.
As part of the agreement, U.S. Steel will retain its name and its headquarters in Pittsburgh. Nippon Steel also said it will honor all collective bargaining agreements that are already in place with the United Steelworkers (USW). Nippon Steel aims to further enhance its U.S. operations, aligning with its overseas business strategy and leveraging significant market volume and growth potential.
The transaction has been unanimously approved by the boards of directors of both companies. The goal is to close on the acquisition by the second or third quarter of calendar year 2024, subject to approval by U.S. Steel’s shareholders.
The deal comes after U.S. Steel turned down a takeover bid from rival Cleveland-Cliffs and Esmark Inc., opting for a more lucrative offer from Nippon Steel. The United Steelworkers (USW), a labor union representing workers at both U.S. Steel and Cleveland-Cliffs, voiced its preference for the Cleveland-Cliffs bid.
The USW expressed disappointment with the U.S. Steel-Nippon Steel deal and criticized both companies for not consulting the union as required. U.S. Steel President Eiji Hashimoto stated that the acquisition would bring together two companies with leading technologies and manufacturing capabilities that aim to serve customers worldwide and build a more environmentally friendly society through the decarbonization of steel.
The transaction is expected to enhance U.S. Steel’s development of Big River 2 near Osceola, Arkansas, which will recycle, refine, and process scrap steel into finished steel products. The facility is set to begin production in 2024 and will play a key role in the production of electrical steel for electric vehicles.