U.S. Steel, one of America's most iconic brands and one of the companies that's had the biggest impact on the Region, will be acquired by a foreign steelmaker.
Japan-based Nippon Steel Corp. reached a deal to acquire U.S. Steel for $55 a share in an all-cash transaction that makes the end of an era. That's a 40% premium in a $14.9 billion deal.
Nippon would take over Gary Works, the Midwest Plant in Portage and the indefinitely idled East Chicago Tin steel mills in Northwest Indiana as part of its acquisition of U.S. Steel.
"NSC has a proven track record of acquiring, operating, and investing in steel mill facilities globally — and we are confident that, like our strategy, this combination is truly 'Best for All', U.S. Steel CEO David Burritt said in a prepared statement. "This transaction realizes the tremendous value today in our company and is the result of our Board of Directors’ comprehensive and thorough strategic alternatives process. For our U. S. Steel employees, who I continue to be thankful for, the transaction combines like-minded steel companies with an unwavering focus on safety, shared goals, values and strategies underpinned by rich histories. "For customers, U.S. Steel and NSC create a truly global steel company with combined capabilities and innovation capable of meeting our customers’ evolving needs. Today’s announcement also benefits the United States — ensuring a competitive, domestic steel industry, while strengthening our presence globally. Our shared decarbonization focus is expected to enhance and accelerate our ability to provide customers with innovative steel solutions to meet sustainability goals.”
U.S. Steel, the world's first billion-dollar corporation, founded Gary as a company town in 1906 and was long the world's largest steelmaker. It's suffered decline over the last few decades due in part to a surge in imports of steel from Japan and other countries since the 1970s.
Under the new ownership, U.S. Steel will retain its name and headquarters in Pittsburgh.
“We are excited that this transaction brings together two companies with world-leading technologies and manufacturing capabilities, demonstrating our mission to serve customers worldwide, as well as our commitment to building a more environmentally friendly society through the decarbonization of steel," NSC President Eiji Hashimoto said in a prepared statement. "NSC has long admired U.S. Steel with deep respect for its advanced technologies, rich history, and talented workforce and we believe we can jointly take on the challenge of raising our aspirations to even greater heights. The transaction builds on our presence in the United States and we are committed to honoring all of U.S. Steel’s existing union contracts. We look forward to collaborating closely with the U. S. Steel team to bring together the best of our companies and move forward together as the ‘Best Steelmaker with World-Leading Capabilities’.”
U.S. Steel put itself up for sale after getting a bid from rival Cleveland-Cliffs earlier this year. The steelmaker then solicited takeover bids. Its board met over the weekend to review offers and unanimously approved a sale to Nippon, which still must be approved by federal regulators and by U.S. Steel shareholders.
The companies announced the sale at 5 a.m. Central time Monday.
“We believe this transaction is in the best interests of our two companies, providing strong, immediate value for U. S. Steel shareholders while enhancing NSC’s long-term growth prospects," NSC Executive Vice President Takahiro Mori said in the news release announcing the sale. "We have a strong balance sheet and are confident in our ability to unlock the potential of bringing together NSC and U. S. Steel through advancement in steelmaking, creating long-term value for our companies’ stakeholders, including our customers, employees, suppliers, communities and shareholders.”
The deal will mark the return of Nippon Steel to Northwest Indiana. ArcelorMittal and Nippon Steel & Sumitomo Metal Corp. previously partnered on the I/N Tek and I/N Kote joint ventures in New Carlisle. The finishing lines are now owned outright by Cleveland-Cliffs.
The United Steelworkers union slammed the proposed deal.
“To say we’re disappointed in the announced deal between U.S. Steel and Nippon is an understatement, as it demonstrates the same greedy, shortsighted attitude that has guided U.S. Steel for far too long," United Steelworkers President David McCall said. “We remained open throughout this process to working with U.S. Steel to keep this iconic American company domestically owned and operated, but instead it chose to push aside the concerns of its dedicated workforce and sell to a foreign-owned company."
The USW had backed a deal with Cleveland-Cliffs, a company it's found it easier to negotiate with in the past.
“Neither U.S. Steel nor Nippon reached out to our union regarding the deal, which is in itself a violation of our partnership agreement that requires U.S. Steel to notify us of a change in control or business conditions," he said. “Based on this alone, the USW does not believe that Nippon understands the full breadth of the obligations of all our agreements, and we do not know whether it has the capacity to live up to our existing contract. This includes not just the day-to-day commitments of our labor agreement, but also significant obligations to fund pension and retiree insurance benefits that are the most extensive in the domestic steel industry Our union intends to exercise the full measure of our agreements to ensure that whatever happens next with U.S. Steel, we protect the good, family-sustaining jobs we bargained. We also will strongly urge government regulators to carefully scrutinize this acquisition and determine if the proposed transaction serves the national security interests of the United States and benefits workers."
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