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Nippon Steel Corporation (NSC), Japan’s top steelmaker, is set to acquire United States Steel Corporation (“U. S. Steel”) in a cash transaction valued at nearly $15 billion. This acquisition raises questions about the future of American industry and labor amid larger national security conversations.
U.S. Steel is a steel producer that supplies products to many industries, including automotive, construction, appliances, energy, containers, and packaging. It was founded in 1901 and is headquartered in Pittsburgh, Pennsylvania. As of 2022, U.S. Steel is the 27th largest steelmaker in the world, producing about 14.5 million tonnes of liquid steel annually.
The definitive agreement, which has already been approved by both companies’ boards of directors, will see NSC pay $55.00 per U.S Steel share.
This price is a 40% premium over the closing stock price as of December 15, 2023, reflecting a 14.1 billion equity value and the assumption of debt, summing up to a total enterprise value of $14.9 billion.
“NSC’s acquisition of U. S. Steel will enhance its world-leading manufacturing and technology capabilities and enable it to expand the geographic areas in which NSC can better serve all of its stakeholders, including customers and society at large. The transaction will further diversify NSC’s global footprint by significantly expanding its current production in the United States, adding to its primary geographies of Japan, ASEAN, and India. As a result of NSC’s acquisition of U. S. Steel, its expected total annual crude steel capacity will reach 86 million tonnes – accelerating progress towards NSC’s strategic goal of 100 million tonnes of global crude steel capacity annually,” according to the news release.
NSC President Eiji Hashimoto said, “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.”
“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. We look forward to collaborating closely with the U. S. Steel team to bring together the best of our companies and move forward together as the ‘Best Steelmaker with World-Leading Capabilities’,” he added.
For U. S. Steel, represented by President and CEO David B. Burritt, the acquisition signifies the recognition of the company’s value and adherence to joint strategies and shared goals, particularly in the realm of “sustainability.”
Strategic Benefits Highlighted:
- Combining NSC’s and U. S. Steel’s technological strengths will foster innovation and the production of high-grade steel products, including electrical steel and automotive flat steel.
- The merger addresses the surging demand for high-grade steel in the U.S and globally, ensuring the combined entity will maintain a stronghold in providing top-quality products and services.
- Both corporations are aligning their efforts to lead the steel industry toward decarbonization by 2050, with NSC developing breakthrough technologies for carbon neutrality and U. S. Steel focusing on energy efficiency and sustainable operations.
- Existing agreements with the United Steelworkers Union will be honored by NSC, committing to uninterrupted and collaborative union relationships.
- The combined forces are poised to create significant value for stakeholders of both entities, with the transaction presenting immediate and strong value to U. S. Steel shareholders while promising enhanced profitability and long-term value for NSC shareholders.
The transaction, expected to finalize in the second or third quarter of 2024, is contingent upon approval by U. S. Steel’s shareholders and the receipt of customary regulatory approvals. NSC has secured financing commitments from Japanese banks and does not foresee any financing hurdles affecting the deal.
According to the report, USS will continue to operate under the “U.S. Steel” brand name, and the headquarters will remain in Pittsburgh, PA.
The acquisition, while poised to create a global powerhouse in steel production, has sparked discussions on the impacts of such international mergers on national security and labor stability in key industries, as one of America’s iconic companies prepares to change hands.
According to X user Travis, “US Steel is selling off to a Japanese manufacturer. US Coal plants will be shut down to appease climate change activist. US Oil production is being shut down left and right to appease environmentalists. US car manufacturers are producing more and more cars overseas with minimal penalty from the DC swamp. Everything that once made this country the strongest on earth is being destroyed or sold off. The DC elites had to get rid of Trump so they could get rid of American greatness. Are you ready to completely lose everything that once made this country great, or are you going to fight?”
US Steel is selling off to a Japanese manufacturer.
US Coal plants will be shut down to appease climate change activist.
US Oil production is being shut down left and right to appease environmentalists.
US car manufacturers are producing more and more cars overseas with… pic.twitter.com/LNxMjK2MRI
— Travis (@Travis_in_Flint) December 18, 2023
U.S. Steel is now a Japanese company. No, I’m not joking. It was sold today for $14 Billion to the highest foreign bidder. The auctioning off of critical companies like this is a national security threat, a threat to US workers and a betrayal to our country. Absolutely shameful. pic.twitter.com/p2ptheUlHp
— Robby Starbuck (@robbystarbuck) December 18, 2023
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