Japan’s Nippon to buy US Steel

US Steel

In a move that will create one of the biggest steel companies outside of China, Japanese steel giant Nippon Steel Corporation (NSC) has announced plans to buy US Steel.

The deal is said to be worth almost $15 billion (US) at $55 (US) per share in an all-cash transaction, representing a 40 per cent premium.

In a media release, NSC said the purchase would allow it to diversify its global footprint by securing integrated steel manufacturing capabilities in the United States, adding to exisiting operational bases.

“NSC has long admired US 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,” said NSC President, Eiji Hashimoto.

US Steel, which employees more than 22,000 people globally, including 14,00 in the United States, has been on the hunt for a buyer since August when it rejected a smaller, unsolicited bid from US rival, Cleveland Cliffs for $7 billion (US).

Meanwhile, United Steelworkers Union has said it would work to block the takeover.

“To say we’re disappointed in the announced deal between US Steel and Nippon is an understatement, as it demonstrates the same greedy, shortsighted attitude that has guided US Steel for far too long,” said United Steelworkers Union President David McCall. “We remained open throughout this process to working with US Steel to keep this iconic American company domestically owned and operated, but instead it chose to push aside the concerns of its workforce and sell to a foreign-owned company.”

NSC has said it will honour all collective bargaining agreements with United Steelworks Union and retain the company’s name and headquarters in Pittsburgh, Pennsylvania.

US Steel was founded in 1901 by Andrew Carnegie and JP Morgan and was, at its height, one of the biggest companies in the world.

US Steel President and CEO, David B. Burritt, said the announcement benefits the United States by ensuring a competitive, domestic steel industry while strengthening its global presence.

“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.”

US Steel said it expected the purchase to be completed in the second or third quarter of next year, with both boards having now approved the deal.

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