US Steel to be acquired for more than £11 billion by Nippon Steel

US Steel, the Pittsburgh steel producer that played a key role in the nation’s industrialisation, is being acquired by Nippon Steel in an all-cash deal valued at approximately 14.1 billion dollars (£11.1 billion).

The transaction is worth about 14.9 billion dollars (£11.9 billion) when including the assumption of debt.

The price tag for US Steel is nearly double what was offered four months ago by rival Cleveland Cliffs.

US Steel, which rejected that offer, confirmed the offering price from Nippon early on Monday.

US Steel will keeps its name and its headquarters in Pittsburgh, where it was founded in 1901 by JP Morgan and Andrew Carnegie.

Nippon said it will also honour all collective bargaining agreements in place with the United Steelworkers union and other employees, and is committed to maintaining its relationship with workers.

Soaring prices have helped fuel consolidation in the steel industry this decade.

Steel prices more than quadrupled near the start of the pandemic to near 2,000 dollars (£1,581) per metric tonne by the summer of 2021 as supply chains experienced gridlock, a symptom of surging demand for goods and the lack of anticipation of that demand.

Nippon, which will pay 55 dollars (£43.47) per share for US Steel, said on Monday that the deal will bolster its manufacturing and technology capabilities.

It will also expand Nippon’s production in the US and add to its positions in Japan, India and the Association of Southeast Asian Nations region.

Nippon said the acquisition is anticipated to bring its total annual crude steel capacity to 86 million tons (78 million metric tonnes) and help it capitalise on growing demand for high-grade steel, automotive and electrical steel.

“The transaction builds on our presence in the United States and we are committed to honouring all of US Steel’s existing union contracts,” Nippon president Eiji Hashimoto said in a prepared statement.

US Steel chief executive David Burritt said the deal is beneficial to the United States, “ensuring a competitive, domestic steel industry, while strengthening our presence globally”.

The deal, which was approved by both companies’ boards, is targeted to close in the second or third quarter of 2024.

It still needs approval from US Steel shareholders.

Shares of US Steel soared by more than 27% before the opening bell on Monday.