Japanese company Nippon Steel to acquire U.S. Steel in $14.9 billion dollar deal

Plans for Nippon Steel to buy U.S. Steel

Major mining news on Monday, that U.S. Steel has agreed to become part of Japanese steelmaker Nippon Steel.

Major mining news on this Monday morning.

Nippon Steel Corporation, Japan’s largest steelmaker and one of the world’s leading steel manufacturers, and United States Steel Corporation announced that they have entered into a definitive agreement.

Nippon will acquire U. S. Steel in an all-cash transaction at $55.00 per share, representing an equity value of approximately $14.1 billion plus the assumption of debt, for a total enterprise value of $14.9 billion.

The transaction has been unanimously approved by the Board of Directors of both NSC and U. S. Steel.

The statement went on to say that NSC has a strong track record of safety in the workplace and working collaboratively with unions. All of U. S. Steel’s commitments with its employees, including all collective bargaining agreements in place with its unions, will be honored and NSC is committed to maintaining these relationships uninterrupted.

Still, the steelworkers sent out a statement slamming the announcement. It said, in part, “To say we’re disappointed in the announced deal between U.S. Steel and Nippon is an understatement, as it demonstrates the same greedy, shortsighted attitude that has guided U.S. Steel for far too long. We remained open throughout this process to working with U.S. Steel to keep this iconic American company domestically owned and operated, but instead it chose to push aside the concerns of its dedicated workforce and sell to a foreign-owned company. Neither U.S. Steel nor Nippon reached out to our union regarding the deal, which is in itself a violation of our partnership agreement that requires U.S. Steel to notify us of a change in control or business conditions.”

U.S. Steel owns Minntac and Keetac.

U.S. Steel’s CEO Dave Burritt shared on Monday’s conference call that the company will become a subsidiary of Nippon, and will remain headquartered in Pittsburgh.

“We will continue to operate our mining and steelmaking facilities in the United States, for our U.S. based customers,” Burritt said. “We are pleased NSC is dedicated to being a productive member of these communities. And U.S. Steel’s relationships and long standing tradition of charitable giving will continue.”

Nippon has operated in the U.S. for 40 years, according to their leadership. And employ about 600 USW members.

The deal is expected to close in the 2nd or 3rd quarter of 2024.

Representative Spencer Igo sent out a statement. It reads:

“Today’s news opens the door for new possibilities on the Iron Range as Nippon’s acquisition of U.S. Steel will better position our region to play an important role in helping meet increased, global demand for steel,” said Igo. “There are many questions that will be answered in the weeks and months ahead, but I am encouraged that Nippon has made clear that they are committed to honoring all of U.S. Steel’s collective bargaining agreements that have been negotiated over the years. Moving forward, I expect operations at Keetac and Minntac to continue uninterrupted and am hopeful that new technologies will expand opportunities in Minnesota.”

In the summer, U.S. Steel announced they were exploring options for the company, after receiving multiple offers, including from rival Cleveland-Cliffs.

Cliffs sent out a statement as well. Lourenco Goncalves, Chairman, President of CEO of Cleveland-Cliffs, said, “We identified U.S. Steel as an extremely undervalued company with significant synergy potential when combined with Cleveland-Cliffs, creating a union-friendly American champion among the top-10 steelmakers in the world. Even though U.S. Steel’s Board of Directors and CEO chose to go a different direction with a foreign buyer, their move validates our view that our sector remains undervalued by the broader market, and that a multiple re-rating for Cleveland-Cliffs is long overdue. We congratulate U.S. Steel on their announcement and wish them luck in closing the transaction with Nippon Steel.”

Senator Amy Klobuchar weighed in on Friday. Her office sent a statement: “Senator Klobuchar’s number one focus is keeping these jobs in northern Minnesota. She believes this proposal must be immediately and thoroughly reviewed by the United States government. There is an existing foreign investment review process that includes the Department of Treasury, State, Homeland Security, Justice, Commerce, Labor, and more, and the Senator has requested that this proposed transaction be immediately reviewed for labor, economic and national security considerations.”