(New York) The Japanese groups Nippon Steel and the American group U.S. Steel announced on Monday their next merger, a transaction worth approximately $14.1 billion (excluding debt) which greatly displeases the American steel union.
The acquisition by the Japanese steel giant is to be completed in all cash at a price of $55 per share, a 40% premium to U.S. Steel’s closing stock price on Friday, according to a statement from the two. groups.
Nippon Steel, which will finance this acquisition through already approved bank loans, also intends to take over the debt of the American group, bringing the total amount of the operation to $14.9 billion.
Both boards of directors unanimously approved the agreement, which remains subject to approval by U.S. Steel shareholders and regulatory authorities.
Finalization is expected by the third quarter of 2024 at the latest.
U.S. Steel (USS) launched a strategic review in August after receiving several unsolicited offers for a partial or full buyout.
At the time, it rejected an offer from its American competitor, Cleveland-Cliffs, which valued the merger at around $10 billion.
The USW metalworkers union then indicated that it supported the agreement proposed by Cleveland-Cliffs. Union president Thomas Conway said the USW would not support any group other than Cliffs.
“To say we are disappointed by the announced agreement between U.S. Steel and Nippon is an understatement, as it exemplifies the same greedy, short-term attitude that has guided U.S. Steel for far too long,” the union president commented to the international David McCall, in a press release.
“We have remained open throughout the process to working with U.S. Steel to keep this iconic American company under American ownership” but management “chose to ignore the concerns” of employees, he continued.
According to him, neither group has contacted the union about this transaction “which, in itself, is in violation of our agreement” with U management. S.Steel.
All agreements concluded between U.S. Steel and the USW union will be respected, the companies assured Monday, specifying that the American group would notably retain its name and its headquarters in Pittsburgh (Pennsylvania) following the merger.
The collective agreement between the union and management is valid until 2028.
This acquisition will significantly increase Nippon Steel’s current production in the United States.
“Through NSC’s (Nippon Steel Corporation) acquisition of U.S. Steel, its total planned annual crude steel production capacity will reach 86 million tons, accelerating progress toward NSC’s strategic goal of 100 million tons of global crude steel capacity per year,” according to their statement.
The Japanese group currently produces around 60 million tonnes.
“Our common goal in terms of decarbonization should improve and accelerate our ability to provide our customers with innovative steel solutions to achieve sustainable development goals,” assured the two groups, which were aiming, before their marriage, for carbon neutrality in 2050.
The two groups expect to achieve synergies – undisclosed – through the pooling of their production technologies, their knowledge as well as through energy savings and recycling.
Nippon Steel, present for around forty years in the United States where it employs around 4,000 people – including 620 USW members – out of a total of around 106,000 employees worldwide, also has production infrastructure in Japan , in India, Brazil, Thailand and Sweden.
USS’s industrial base, founded in 1901 and which had nearly 23,000 employees at the end of 2022, is located in the United States and Slovakia.
Shortly before 11 a.m., USS stock jumped 26.49% to $49.75 on the New York Stock Exchange. That of Nippon Steel ended down 1.07% in Tokyo.
