NIPPON, the fourth-largest steelmaker in the world, has agreed to buy US Steel for US$14.9bn. The acquisition would create one of the world's biggest steel companies outside of China, and would end the independence of one of America’s oldest industrial enterprises.
The takeover would also give Nippon Steel an inroad into the American market, and make it one of the country’s top suppliers for its auto industry.
US Steel had already rejected one offer of US$7.3bn for the company by rival firm Cleveland-Cliffs in August. US Steel snubbed the offer saying it would examine its strategic options, a process that sparked interest from other domestic and overseas steelmakers. The firm then chose Nippon Steel’s deal valued at over double that of Cleveland-Cliffs.
Following the close of the transaction, US Steel, which has a production capacity of 20m t/y, would retain its name, brand and headquarters in Pittsburgh.
David Burritt, US Steel’s CEO, said the combination of the two companies “is good for the US and creates a more competitive market here with one of the US’s greatest allies.”
However, the United Steelworkers (USW) union has criticised the two firms for not engaging with the union before the deal was announced, and called the sale greedy and shortsighted, reports Wall Street Journal.
President Biden has also expressed concern about the deal's potential impact on supply chain reliability, and on national security, even though Japan is considered a close ally. In a statement by the White House it said the purchase looks like the type of transaction that could be “carefully” investigated, and that the administration will be ready to look at the findings of any such investigation and to act if appropriate.
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