US 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 combined company will be among the top three steel-producing companies in the world, according to 2022 figures from the World Steel Association. The price tag for US Steel is nearly double what was offered just four months ago by rival Cleveland-Cliffs, per the AP. US Steel, which rejected that offer, confirmed the offering price from Nippon early Monday. US Steel will keep its name and its headquarters in Pittsburgh, where it was founded in 1901 by JP Morgan and Andrew Carnegie, among others.
It will become a subsidiary of Nippon, which said Monday it will also honor all collective bargaining agreements in place with the United Steelworkers union and other employees, and that it's committed to maintaining its relationship with workers. Nippon has had a presence in the US for almost 40 years, starting with a joint venture with Wheeling-Pittsburgh Steel in 1984 that later became a wholly owned subsidiary. 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 US Steel, said Monday that the deal will bolster its manufacturing and technology capabilities.
It will also expand Nippon's production in the US and add to its positions in Japan, India, and the ASEAN region. "The transaction builds on our presence in the United States, and we are committed to honoring all of US Steel's existing union contracts," Nippon President Eiji Hashimoto said in a statement. US Steel CEO David Burritt said the sale is beneficial to the US, "ensuring a competitive domestic steel industry, while strengthening our presence globally." The company will continue to run its mining and steel operations in the US for its domestic customers, he said during a conference call Monday. The acquisition has been approved by the boards of both companies and is targeted to close in the second or third quarter of 2024. It still needs approval from US Steel shareholders. US Steel shares soared more than 28% before the opening bell Monday.
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