USS ceo ‘extremely confident’ Nippon deal will close

US Steel’s (USS) top executive still expects that the takeover of the iconic Pittsburgh, Pennsylvania-based company by Japan’s Nippon Steel will receive all approvals by the end of 2024, Kallanish hears at the Global Steel Dynamics Forum in New York.

Speaking on the conference stage late Tuesday, USS president and chief executive officer David Burritt reiterates that a merger with Nippon is “the right choice” for his 123-year-old company and for US national security and economic well-being.

“I’m extremely confident that we will be able to close the deal this year,” Burritt proclaims.

The acquisition agreement, announced last year, has faced opposition not only from the United Steelworkers but also from both major US presidential candidates and members of Congress in Pennsylvania and other states. The arrangement is undergoing an in-depth review by the US Department of Justice (DoJ).

Burritt says his employees will come to understand that they will benefit from the takeover. He says Nippon pledges to honor current labour contracts through 2026 and will invest over $1 billion in the business, a capex commitment that exceeds existing thresholds in pacts with the union.

“They’re experts in integrated mills, and they want to invest here,” Burritt explains. “They’re upping the ante beyond what’s in the basic labor agreement.”

He argues that the “friendshoring” arrangement with a buyer based in Japan, a key US ally in the Asia-Pacific region, “strengthens national security.” Additionally, Burritt finds it a breath of fresh air that there will be technology transfer into the US instead of the usual route out of the US.

The USS ceo says there was so much interest in acquiring his company that “something like 19 NDAs” were signed, referring to non-disclosure agreements that precede negotiations. Some proposals would have bumped into antitrust roadblocks, but not with Nippon.

“Customers love it so much that they have written letters to the DoJ saying this deal will strengthen competition,” Burritt states.

Dom Yanchunas USA

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European Commission approves Nippon-US Steel acquisition

The European Commission has approved the acquisition of US Steel by Nippon Steel Corporation, it says in a note seen by Kallanish.

The Commission concluded the transaction would not raise competition concerns, given the companies’ limited market positions resulting from the proposed transaction. The notified transaction was examined under the simplified merger review procedure.

US Steel owns the 4.5 million tonnes/year crude steel capacity blast furnace-based steelworks in Kosice, which has been touted to transition to electric arc furnace steelmaking. Although the investment has received Slovakian government backing, the plant’s new owner will also need to provide capital for the project’s financing requirement to be covered.

In the US, the Nippon acquisition has hit a political stumbling block, with President Joe Biden and the US Steel union both opposing the deal.

The Japanese steelmaker said last week the transaction will be delayed to the third or fourth quarter. Nippon and US Steel have each received a request for additional information and documentary materials from the US Department of Justice in connection with the DOJ’s review of the proposed acquisition.

Adam Smith Poland

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Esmark submits offer to acquire US Steel

Esmark, a privately held company with operations in the industrial and commodity sectors, announced Aug. 14 a voluntary public cash and exchange offer for all the outstanding shares in US Steel at a value of $35/share.

The offer from Esmark comes a day after US Steel said it would initiate a formal review process to “evaluate strategic alternatives for the company,” including the sale of the full company or some of its assets as it had received multiple unsolicited bids for all or portions of the company.

Following US Steel’s announcement, rival steelmaker, Cleveland-Cliffs said it submitted an offer in late July to acquire all of US Steel in a cash and stock deal, however, the offer was rejected by US Steel’s board on Aug. 13.

Esmark, based in the Pittsburgh area, said its initial offer period runs from Aug. 14 through Nov. 30 and may be extended. Completion of the offer is expected in the fourth quarter of 2023, subject to regulatory and antitrust clearances, it said.

Prior to founding the current Esmark, CEO James Bouchard previously worked for US Steel, formerly serving as vice president, commercial, for US Steel Europe. Bouchard led the company’s European commercial operations following the acquisition of its Kosice, Slovakia, mill.

Esmark Steel Group, a subsidiary of Esmark Inc, is a processor and distributor of value-added flat-rolled steel and is the third-largest US producer of tin plate steel. In addition to steel services, it has operations in oil and gas exploration, aviation, real estate, professional services and technology.

Author Justine Coyne

US Steel rejects Cleveland-Cliffs’ $7.3 billion bid

The nation’s second-largest domestic steel producer by volume, US Steel, has rejected an unsolicited $7.3 billion buyout proposal from competitor Cleveland-Cliffs, the third-largest domestic producer.
 
US Steel notes that it has received acquisition proposals from multiple other parties.
The board of directors for US Steel is commenting specifically on Cleveland-Cliffs’ offer due to a failure in negotiations between the parties.
 
“At this juncture, we cannot determine whether your unsolicited proposal properly reflects the full and fair value,” explains US Steel president and ceo David Burritt.
 
Kallanish understands that Cleveland-Cliffs’ offer represented a 42% premium above US Steel’s share price at the end of market close on 28 July, and a 43% premium above the current market price.
 
US Steel’s leadership “has made significant progress transforming the company into a customer-centric, world-competitive … steelmaker as we continue to win in strategic markets, move down the cost curve, and move up the talent curve,” Burritt adds.