WEDNESDAY, DECEMBER 20, 2023
Pittsburgh steel producer U.S. Steel announced it is being acquired by Japan’s largest steelmaker, Nippon Steel Corporation, at approximately $14.1 billion. The deal has been unanimously approved by the Board of Directors of both NSC and U.S. Steel.
The transaction is reportedly worth about $14.9 billion when including the assumption of debt. The combined company will be among the top three steel-producing companies in the world, according to 2022 figures from the World Steel Association.
U.S. Steel will keep its name and its headquarters in Pittsburgh, where it was founded in 1901 by J.P. Morgan and Andrew Carnegie. It will become a subsidiary of Nippon, The Associated Press reports.
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.
Japanese steelmaker Nippon Steel has agreed to acquire United States Steel in a deal worth $14.9 billion including debt https://t.co/qx20zhveJI https://t.co/qx20zhveJI
— The Wall Street Journal (@WSJ) December 18, 2023
“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,” said NSC President Eiji Hashimoto.
“NSC has long admired U.S. Steel with deep respect for its advanced technologies, rich history, and talented workforce and we believe we can jointly take on the challenge of raising our aspirations to even greater heights. 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.”
According to the press release from U.S. Steel, strategic benefits of the acquisition include:
“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. This transaction realizes the tremendous value today in our company and is the result of our Board of Directors’ comprehensive and thorough strategic alternatives process,” said President and Chief Executive Officer of U.S. Steel, David B. Burritt.
“For our U.S. Steel employees, who I continue to be thankful for, the transaction combines like-minded steel companies with an unwavering focus on safety, shared goals, values, and strategies underpinned by rich histories. For customers, U.S. Steel and NSC create a truly global steel company with combined capabilities and innovation capable of meeting our customers’ evolving needs.
“Today’s announcement also benefits the United States—ensuring a competitive, domestic steel industry, while strengthening our presence globally. Our shared decarbonization focus is expected to enhance and accelerate our ability to provide customers with innovative steel solutions to meet sustainability goals.”
The deal is anticipated to close by mid-2024.
Industry Reaction
Despite the reassurances from the companies, the news has shaken the steelmaking industry, with unions, workers and politicians expressing their discontent at the deal. U.S. Steel executives were also asked about a potential pushback from U.S. regulators over security concerns on Monday.
“I live across the street from U.S. Steel’s Edgar Thompson plant in Braddock,” wrote Sen. John Fetterman (D-PA) in a statement. “It’s absolutely outrageous that U.S. Steel has agreed to sell themselves to a foreign company.
“Steel is always about security—both our national security and the economic security of our steel communities. I am committed to doing anything I can do, using my platform and my position, to block this foreign sale.”
In a statement, Pennsylvania Governor Josh Shapiro said he worked with the secretary of Community and Economic Development to learn more about the intended sale and spoke directly with the leader of the United Steelworkers in Pennsylvania, the CEO of U.S. Steel and senior leadership at Nippon Steel.
“In the days and weeks ahead, Governor Shapiro will continue to engage with key stakeholders in pursuit of his top priority: protecting good-paying Pennsylvania jobs in the steel industry, keeping U.S. Steel's headquarters in Pittsburgh and production in the Mon Valley and Western Pennsylvania, and ensuring the steel industry has a real growth strategy that benefits Pennsylvanians and the Commonwealth as a whole,” Shapiro's statement read in part.
The United Steelworkers International President David McCall also issued a statement following the announcement, “slamming” the purchase deal:
“To say we’re disappointed in the announced deal between U.S. Steel and Nippon is an understatement, as it demonstrates the same greedy, shortsighted attitude that has guided U.S. Steel for far too long.
“We remained open throughout this process to working with U.S. Steel to keep this iconic American company domestically owned and operated, but instead it chose to push aside the concerns of its dedicated workforce and sell to a foreign-owned company.
“Neither U.S. Steel nor Nippon reached out to our union regarding the deal, which is in itself a violation of our partnership agreement that requires U.S. Steel to notify us of a change in control or business conditions.
“Based on this alone, the USW does not believe that Nippon understands the full breadth of the obligations of all our agreements, and we do not know whether it has the capacity to live up to our existing contract. This includes not just the day-to-day commitments of our labor agreement, but also significant obligations to fund pension and retiree insurance benefits that are the most extensive in the domestic steel industry.
“No union has actively engaged in more acquisitions in its core industries than the USW, and rest assured, our union will hold management at U.S. Steel accountable to every letter of our collective bargaining and other existing agreements.”
Tagged categories: Acquisitions; Business management; Business matters; Business operations; Galvanized steel; Good Technical Practice; Industry News; Nippon Steel Corp.; Program/Project Management; Stainless steel; Steel; Structural steel; U.S. Steel; Unions; Weathering steel
