Nippon Steel Monday said it’s reached a deal to buy U.S. Steel after the 122-year-old Pittsburgh steelmaker put itself on the block.
Nippon Steel JP:
5401,
announced it would pay U.S. Steel
X,
$14.1 billion, or $55 per share, which is a 40% premium. Including assumed debt, Nippon Steel is paying $14.9 billion.
U.S. Steel’s stock rallied 29% to $50.62 in premarket trading. U.S. Steel will remain with its headquarters in Pittsburgh, along with retaining its “iconic name.” J.P. Morgan — the person, not the bank — founded the company in 1901, through the merger of several companies, including Andrew Carnegie’s Carnegie Steel Company.
U.S. Steel said in August it would explore options for its business after it rejected a takeover offer from Cleveland-Cliffs
CLF,
On its last conference call, U.S. Steel CEO David Burritt said it’s “coming down the other side of the mountain” after a ramp-up in capital spending.
Anticipating political roadblocks, both companies set up a website with the URL, www.BestDealforAmericanSteel.com.
Nippon Steel said it will honor all collective bargaining agreements with the United Steelworkers Union and that both boards have approved the deal.
Nippon Steel said it will be well-positioned to capitalize on the growing demand for high-grade steel, automotive and electrical steel, and provide excellent products and services.
The companies said the deal, which, will close in the second or third quarter of 2024, would create “significant value” for both companies.
Citi advised Nippon Steel, while Goldman Sachs and Evercore advised U.S. Steel.
