Japan's Nippon Steel to buy US Steel in $14.9B deal

Mathias Hammer
·2 min read
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Semafor Signals

NEWS

Japan’s Nippon Steel announced on Monday that it will buy U.S. Steel, one of America’s most iconic companies, in a $14.9 billion deal.

Nippon will purchase the Pittsburgh-based company for $55 a share, a 40% mark-up on the company’s share price when the market closed on Friday.

Nippon will face an uphill battle to win over the United Steelworkers union. “To say we’re disappointed in the announced deal between U.S. Steel and Nippon is an understatement,” the union’s president said in a statement. Nippon Steel said it would honor all agreements between U.S. Steel and the union.

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An end to months of uncertainty

Sources: Pittsburgh Post-Gazette, The Times of Northwest Indiana

For U.S. Steel’s more than 20,000 workers, the deal will end months of uncertainty about the future of their communities. In regions such as Western Pennsylvania, entire communities that surround the plants were on the line, the Pittsburgh Post-Gazette reported earlier this year. “Whoever buys it, just keep it open,” a U.S. Steel employee said. Since the company was put up for sale, steelworkers have been concerned about what new owners would mean for them and their livelihoods, a union representative told The Times of Northwest Indiana. Prior to the deal, U.S. Steel had suffered several quarters of falling revenue and profit, and shares of the company dropped more than 24% in the past five years.

The deal may spark political outcry

Sources: The Wall Street Journal

A number of U.S. politicians have raised concerns about the company being taken over by an overseas buyer. Ohio Sen. J.D. Vance, a Republican, urged U.S. Steel in a letter not to consider offers from overseas buyers. Democratic Sen. John Fetterman said he lives across the street from a U.S. Steel plant in Pennsylvania and vowed to do ”anything I can do" to block the sale. Rep. Ro Khanna of California said that “any new steel acquisitions in the U.S. must be led by American companies.” The deal will require regulatory approval, including from the Committee on Foreign Investment in the U.S, which assesses the national security implications of foreign acquisitions, The Wall Street Journal reported.

Japanese companies are on an overseas spending spree

Sources: The Financial Times, Bloomberg’s Stephen Stapczynski, Reuters

The deal is the latest in a string of Japanese overseas acquisitions, the Financial Times reported. Japanese companies have accumulated significant stores of cash they are looking to spend as a hedge against their shrinking domestic market. The deal comes as Nippon Steel expects American demand for steel to rise, a Bloomberg reporter wrote. U.S. Steel provides steel for renewable energy projects, and stands to benefit from the Inflation Reduction Act’s tax credits and Trump-era import tariffs, Reuters reported.