Japan Nippon Steel acquire U.S. Steel $14.9 billion

Nippon Steel clinched a $14.9 billion deal to buy U.S. Steel, outbidding rivals. The acquisition will help Nippon expand in the U.S.

Nippon Steel 5401.T made a momentous deal on Monday, acquiring U.S. Steel X.N for a staggering $14.9 billion in cash, outbidding competitors like Cleveland-Cliffs CLF.N, ArcelorMittal MT.LU, and Nucor NUE.N. The deal represents a significant premium of 142% to the last trading day before Cleveland-Cliffs' initial bid for U.S. Steel. The acquisition is a strategic move, betting on U.S. Steel's potential to benefit from President Joe Biden's infrastructure bill.

U.S. Steel initiated the sale process in response to Cleveland-Cliffs' pursuit, ultimately deeming Nippon's offer superior. Nucor, the largest U.S. steelmaker, also made an offer to acquire U.S. Steel in partnership with another company. ArcelorMittal was another potential suitor, while Nippon and ArcelorMittal already co-own a steel plant in Alabama. The acquisition of U.S. Steel will significantly expand Nippon's production in the United States, particularly as steel prices are expected to rise due to increased production by automakers.

The deal has raised concerns, with some analysts expressing the belief that Nippon is overpaying for U.S. Steel's assets. Despite this, U.S Steel shares surged following the deal announcement, while Cliffs and ArcelorMittal also saw increases in their stock value. The acquisition will likely result in Cliffs failing to renew a contract to provide slabs to ArcelorMittal and Nippon's Alabama plant, as Nippon will now turn to U.S. Steel as a supplier.

The acquisition has faced opposition from the United Steelworkers union, which had endorsed Cleveland-Cliffs as the acquirer. The union is concerned about the preservation of labor agreements under Nippon's ownership. Nippon, however, has assured that all commitments with U.S. Steel employees, including collective bargaining agreements, will be honored.

The deal is expected to close in the second or third quarter of 2024, subject to regulatory approvals. The Committee on Foreign Investment in the United States is expected to review the transaction, though it is anticipated that it will attract little antitrust scrutiny. U.S. lawmakers have expressed hostility towards the deal, vowing to scrutinize its implications and block the foreign sale.

U.S. Steel, with a rich history tied to the United States' industrial recovery, has become an attractive takeover target for rivals looking to capitalize on its steel used by the automobile industry and renewable energy sector. The acquisition by Nippon Steel marks a significant development in the steel industry, with implications for the future of U.S. Steel and its employees.