Nippon Steel's $14.1 billion deal for US Steel sparks criticism
Source: AFP
Japan's Nippon Steel agreed to buy US Steel Corp for $14.1 billion, the companies announced on Monday, sparking criticism about the firm's ownership in an industry crucial to US national security.
A major US steelworkers' union and a top US politician came out against the Japanese conglomerate's all-cash agreement to acquire the US firm for $55 per share.
The deal price marks a 40 percent premium on US Steel's closing price on Friday and represents an equity value of about $14.1 billion, the companies said in a statement.
Nippon will also assume the US firm's debt, taking the total value of the agreement to $14.9 billion.
The US company's share price finished the trading day up more than 26 percent on Wall Street following the announcement.
Union, senator slam deal
While the markets responded positively to the deal, the United Steelworkers (USW) union -- which represents 1.2 million US steelworkers and retirees -- did not.
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In a statement, USW International President David McCall said the deal demonstrated "the same greedy, shortsighted attitude that has guided US Steel for far too long."
Neither US Steel nor Nippon "reached out to our union regarding the deal, which is in itself a violation of our partnership agreement that requires US Steel to notify us of a change in control or business conditions," he added.
The US Senator for Pennsylvania John Fetterman, who represents a state with many steel plants, came out against the Nippon deal and vowed to try and block it from going ahead.
"It's absolutely outrageous that they have sold themselves to a foreign nation, and a company," he said in a video posted to X, formerly Twitter.
"Steel is always about security as well," he continued, adding: "I'm going to fight for the steelworkers and their union way of life here."
In a statement, Nippon Steel said it would honor all collective bargaining agreements with USW, as part of a "commitment to maintaining strong stakeholder relations."
Expanding production
US Steel launched a strategic review in August after receiving several unsolicited offers for a partial or total takeover.
It rejected an offer from its main US competitor, Cleveland-Cliffs, which valued the merger at around $10 billion.
USW had indicated it supported the deal put forward by Cleveland-Cliffs.
On Monday, Nippon Steel said the acquisition will significantly expand its current production in the United States to an annual crude steel capacity of 86 million metric tons.
"We are excited that this transaction brings together two companies with world-leading technologies and manufacturing capabilities, demonstrating our mission to serve customers worldwide," Nippon Steel President Eiji Hashimoto said in a statement.
He added that the deal also underscored the firm's "commitment to building a more environmentally friendly society through the decarbonization of steel."
"Today's announcement also benefits the United States -- ensuring a competitive, domestic steel industry, while strengthening our presence globally," US Steel President and CEO David Burritt said.
"Our shared decarbonization focus is expected to enhance and accelerate our ability to provide customers with innovative steel solutions to meet sustainability goals," he added.
US Steel's appeal, according to analysts and industry insiders, stems from the fact it is about to complete a costly investment plan, including the installation of electric arc furnaces instead of coal-fired blast furnaces, to reduce its carbon footprint.
Both boards of directors have unanimously approved the deal, which is subject to approval by US Steel's shareholders, the firms said.
Nippon Steel has some 160,000 workers globally in countries including Japan, India, Brazil, Thailand and Sweden.
The firm has had a presence in the United States for around four decades, and currently employs around 4,000 people -- 620 of which are USW workers.
US Steel, which was founded in 1901 and had almost 23,000 employees at the end of last year, has its manufacturing facilities in the United States and Slovakia.
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Source: AFP
