Japan’s Nippon Steel set to acquire US Steel; to boost output capacity to 86 mil mt/year

Japan’s largest steelmaker, Nippon Steel, said Dec. 18 that it will acquire Pennsylvania-located US Steel for a deal equating to more than $14 billion, a move Nippon Steel said would help boost its annual crude steel production capacity to 86 million mt/year.

Nippon Steel currently has an annual production capacity of 66 million mt, according to the company.

Nippon Steel produced 44.37 million mt of crude steel in 2022, while US Steel produced 14.49 million mt, according to the World Steel Association.

A successful transaction could make the combined entity the world’s third largest steel producer, after China’s Baowu Group and Luxembourg-based Arcelor Mittal, according to calculations based on the World Steel Association data.

The move would further diversify Nippon Steel’s global footprint by significantly expanding its current production, also accelerating its progress towards its strategic goal of 100 million mt/year of global crude steel capacity, the company said.

The deal would combine technology prowess of the two companies, as they look to target high-grade steel products, including automotive and electrical steel as part of their overall decarbonization plans, the two companies said.

Under the deal, Nippon Steel said it will pay $55/share in an all-cash transaction, which represented a 40% premium to the US Steel’s stock value on Dec. 15.

Both the companies said they expected to close the deal in the second or third quarter of 2024, subject to necessary approvals.

US Steel produces and sells flat-rolled and tubular steel products, primarily in North America and Europe, according to S&P Capital IQ data.

Other than its steel operations, US Steel also maintains advanced iron ore production, according to the company.

Nippon Steel’s manufacturing base is in Japan and the company has presence in 15 additional countries including, the US and India, the company said.

Before this announcement, US-based steelmaker Cleveland-Cliffs in August disclosed that it had made a private offer to acquire US Steel in July, but received a rejection letter from the US Steel board in August.

Authors: Rohan Somwanshi, Lucy Tang