In a $14.1 billion transaction, US Steel has consented to be acquired by Nippon Steel, the biggest steel manufacturer in Japan.
The transaction represents the most recent development in the venerable 122-year-old company’s slow downfall. Previously, it was the biggest corporation on the globe. It was a representation of American industrial power and one of the country’s first large companies.
However, Nucor Steel has long since overtaken it to become the biggest US steelmaker.
CEO of US Steel David Burritt stated, “We are confident that… this combination is truly best for all.” “Today’s announcement benefits the United States as well by ensuring a competitive domestic steel industry and bolstering our global presence.”
As per the agreement, US Steel will continue to operate under its current identity and with its headquarters located in Pittsburgh. However, the agreement can still face criticism.
The United Steelworkers union committed earlier this summer to solely back Cleveland Cliffs, a fellow unionized American steel business, in its planned cash and stock agreement to acquire US Steel. At the time, the proposal was priced at $32.53 per share, which was 40% less than Nippon’s all-cash offer. After rejecting that offer, the US Steel Board began to evaluate alternative offers.
At US Steel, the union, which has 11,000 members, criticized the Nippon Steel agreement on Monday.
USW President David McCall expressed his disappointment, saying, “To say we’re disappointed in the announced deal between U.S. Steel and Nippon is an understatement, as it demonstrates the same greedy, shortsighted attitude that has guided U.S. Steel for far too long.” “Throughout this process, we remained open to working with U.S. Steel to keep this iconic American company owned and operated here in the United States, but it chose to sell to a foreign-owned company, despite the concerns of its committed workforce.”
The union expressed its intention to thwart the agreement. Additionally, we will vehemently push government regulators to thoroughly examine this acquisition and ascertain whether the planned transaction advances workers’ interests and advances US national security,” the statement stated.
On Monday, a few MPs from states in the Rust Belt joined the union in opposing a foreign buyer.
Ohio Republican Senator JD Vance said in a statement, “Today, a critical piece of America’s defense industrial base was auctioned off to foreigners for cash.” “I will fight against this outcome in the coming months, as I warned of it months ago.”
A syndicate led by J.P. Morgan and Charles Schwab, two of the most powerful bankers in the world at the time, purchased Andrew Carnegie’s steel company and consolidated it with their interests in the competing Federal Steel company to form US Steel in 1901.
The new business doubled the US budget for that year and became the first in the world to be valued at more than $1 billion. Andrew Carnegie became the world’s richest man as a result of the transaction.
The corporation created the steel that enabled the US to become a world economic powerhouse at the beginning of the 20th century. Steel was needed for skyscrapers, bridges, and dams, as well as for cars, appliances, and other items that Americans were clamoring for.
The all-cash offer made on Monday is 40% higher than the closing price of US Steel shares on Friday. In early trade, US Steel’s shares increased by 27%. Nippon’s stock fell 1% in Japan during trading that ended before the announcement of the deal.