US Steel, the Pittsburgh steelmaker that played a key role in the country's industrialization, is being acquired by Nippon Steel in an all-cash deal worth about $14.1 billion.
The transaction is valued at approximately $14.9 billion, including the assumption of debt.
The deal announcement comes just months after US Steel rejected a $7.3 billion buyout proposal from rival Cleveland Cliffs. US Steel received the offer in August and said at the time it was exploring “strategic alternatives” after receiving several unsolicited offers. The company said it rejected the offer because Cleveland-Cliffs pressured it to accept the terms without allowing it to conduct proper due diligence.
Rising prices have contributed to consolidation in the steel industry this decade. Steel prices more than quadrupled at the start of the pandemic to nearly $2,000 per tonne in the summer of 2021 as supply chains entered gridlock, a symptom of rising demand for goods and the lack of anticipation of that demand.
Nippon, which will pay $55 a share for US Steel, said Monday the deal will strengthen its manufacturing and technology capabilities. It will also expand Nippon's production in the US and grow its positions in Japan, India and the ASEAN region.
Nippon said the acquisition is expected to bring its total annual crude steel capacity to 86 million tonnes and help the company capitalize on growing demand for high-quality, automotive and electrical steel.
“The transaction builds on our presence in the United States and we are committed to honoring all existing US Steel union contracts,” Nippon President Eiji Hashimoto said in a prepared statement.
David Burritt, CEO of US Steel, said the deal is beneficial for the United States, “ensuring a competitive domestic steel industry and strengthening our presence globally.”
The deal, which was approved by the boards of directors of both companies, is expected to close in the second or third quarter of 2024. Approval from US Steel shareholders is still required.
The shares of United States Steel Corp. rose more than 27% before the market opened on Monday.