US Steel Acquired for $14 Billion USD

US Steel Acquired for $14 Billion USD

Steel NewsDate: 25-12-2023 by: Nhu Quynh

As one of the first steel conglomerates in the United States, US Steel has played a crucial role in the development of the country's steel industry. However, currently, US Steel has been acquired by Japan's Nippon Steel for $14 billion USD.

US Steel was founded in 1901 by some of America's most prominent tycoons, including Andrew Carnegie, J.P. Morgan, and Charles Schwab. The company played a vital role in the recovery of the American industry after the Great Depression and World War II. In 2022, US Steel ranked as the 24th largest steel producer globally and the second-largest in the United States, following Nucor Corporation.

In recent times, the stocks of US Steel, based in Pittsburgh, have been performing poorly after several quarters of declining revenue and profits, making the company an attractive acquisition target for competitors. On December 18, 2023, Nippon Steel announced an agreement with US Steel to acquire the company for $14.1 billion USD. This deal positions Nippon Steel to expand global crude steel capacity toward the goal of 100 million tons. This strategic move comes after Nippon Steel outbid competing rivals, including Cleveland-Cliffs Inc., in an auction.

According to the World Steel Association, in 2022, Nippon Steel's production of high-quality crude steel reached 44.37 million tons, ranking fourth globally. Therefore, the acquisition of US Steel will elevate Nippon Steel to the third position in global steel production. This represents a significant step for Nippon Steel in its efforts to strengthen its position in the steel industry and enhance production capabilities on a global scale.

Accordingly, after announcing the acquisition of the US Steel Group, Nippon Steel's stocks experienced a nearly 5% decrease. The stock decline occurred as shares of the steel manufacturer based in Tokyo opened with an excess of sellers, leading to a trading price of around 3,085 yen, marking a 4.7% decrease compared to the previous day's closing value.

The acquisition takes place at a time when the steel industry is facing several challenges, including fluctuating demand and the need for technological advancements to reduce carbon emissions. Nippon Steel's move to acquire US Steel is expected to create a synergistic strength that could lead to more efficient production and help ensure a more stable supply of raw materials for Nippon Steel.

US Steel has announced that the transaction with Nippon is expected to conclude in either the second or third quarter of 2024, depending on regulatory approval. However, the Committee on Foreign Investment in the United States, an agency that carefully examines transactions to identify potential national security risks, is expected to reassess this deal. If the agreement is not approved in this case, Nippon will owe US Steel USD 565 million.

Here is the latest information on Nippon Steel's acquisition of the US Steel plant in the United States. However, there is still no official result in this matter. Stay tuned to MRS Steel, as we will provide the most up-to-date and accurate information on this transaction for our readers.