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Nippon Further Review

Japanese steel giant agrees to purchase U.S. Steel, drawing controversy


Japanese steel giant Nippon Steel, one of the largest steelmakers in the world, has agreed to purchase Pittsburgh-based U.S. Steel, according to a December 18 press release from the latter company, for a price tag of roughly 15 billion dollars. In the U.S., not everyone is thrilled about it.


Tokyo-based Nippon Steel Corporation, Japan’s largest steelmaker and one of the world’s leading steel manufacturers, and United States Steel Corporation, a leading steel producer with competitive advantages in low-cost iron ore, mini mill steelmaking, and best-in-class finishing capabilities, announced that they "have entered into a definitive agreement pursuant to which NSC 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."


Employees working at a U.S. Steel blast furnace.—U.S. Steel photo


While the acquisition will reportedly "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," in Nippon's words, it has U.S. lawmakers worried and upset. One Pennsylvania representative said the agreement "feels like a gut punch". Across the political aisle, three Republican senators protested the deal, calling it "fundamentally troubling", and tying the issue to national security.


NSC counters with numbers that say its expected total annual crude steel capacity will reach 86 million tons – "accelerating progress towards NSC’s strategic goal of 100 million tons of global crude steel capacity annually."


Below are official quotes from the U.S. Steel press release sent to its investors and made public December 18.


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’.”


NSC Executive Vice President Takahiro Mori said, “We believe this transaction is in the best interests of our two companies, providing strong, immediate value for U. S. Steel shareholders while enhancing NSC’s long-term growth prospects. We have a strong balance sheet and are confident in our ability to unlock the potential of bringing together NSC and U. S. Steel through advancement in steelmaking, creating long-term value for our companies’ stakeholders, including our customers, employees, suppliers, communities, and shareholders.”


President and Chief Executive Officer of U. S. Steel, David B. Burritt, said, “NSC has a proven track record of acquiring, operating, and investing in steel mill facilities globally – and we are confident that, like our strategy, this combination is truly Best for All. This transaction realizes the tremendous value today in our company and is the result of our Board of Directors’ comprehensive and thorough strategic alternatives process. For our U. S. Steel employees, who I continue to be thankful for, the transaction combines like-minded steel companies with an unwavering focus on safety, shared goals, values, and strategies underpinned by rich histories. For customers, U. S. Steel and NSC create a truly global steel company with combined capabilities and innovation capable of meeting our customers’ evolving needs. Today’s announcement also benefits the United States – ensuring a competitive, domestic steel industry, while strengthening our presence globally. Our shared decarbonization focus is expected to enhance and accelerate our ability to provide customers with innovative steel solutions to meet sustainability goals.”

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