Nippon Steel Corp. plans to go ahead with the acquisition of United States Steel Corp (X).
Inputs that matter: Bloomberg reports, "Nippon Steel Corp.'s acquisition of United States Steel Corp. would strengthen economic security ties between the U.S. and Japan and help counter China's dominance in steel-making, according to a senior Japanese ruling party lawmaker."
- U.S. Steel releases, "NSC to acquire U.S. Steel for $55.00 per share in an all-cash transaction representing 40% premium, providing certain and immediate value to U.S. Steel shareholders."
- Reuters reports, "Nippon is paying the equivalent of 7.3 times U.S. Steel's 12-month earnings before interest, taxes, depreciation and amortization (EBITDA)."
- "We feel Nippon is overpaying for those assets. This isn't the technology space. This is still the cyclical steel industry," said Gordon Johnson, analyst at GLJ Research.
The opportunity: Reuters reports, "The acquisition of U.S. Steel will help Nippon, the world's fourth largest steel maker, move toward 100 million metric tons of global crude steel capacity, while significantly expanding its production in the United States, where steel prices are expected to rise as automakers ramp up production following their recent deals with labor unions to end strikes."
- Super News explains, "This merger is poised to serve as a beacon of Japan-US cooperation, aiming to counterbalance China's burgeoning influence in the steel-making sector."
- Reuters details, "U.S. Steel shares ended trading up 26% at $49.59 on Monday following the deal announcement."
Zoom in: "There's not a company in the U.S. that can domestically produce the high-end, electrical steel sheets for automobiles which we produce at our steel mills in Japan," NSC president Tadashi Imai said.
- According to Fortune, the next hurdle for the deal will be negotiating with the United Steelworkers union.
Between the lines: President Biden stated that U.S. Steel should remain domestically owned.
- Reuters reports, "Donald Trump has promised to block the deal if he is re-elected."
- "What U.S. politicians are concerned about is jobs and whether U.S. Steel can develop as an iconic U.S. company in the U.S.," Tadashi Imai explains.
Follow the money: The sale of U.S. Steel to NSC is expected to close this year.
- Following the news, U.S. Steel's stock price (X) climbed above $41 per share.
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Read More
- https://www.nipponsteel.com/en/news/20240315_100.html
- https://www.bnnbloomberg.ca/japanese-lawmaker-says-us-steel-deal-would-help-counter-china-risks-1.2053632
- https://investors.ussteel.com/news-events/news-releases/detail/659/nippon-steel-corporation-nsc-to-acquire-u-s-steel
- https://super.news/en/articles/2024/04/01/japans-nippon-steel-corp-eyes-14-1-billion-us-steel-acquisition-to-counter-chinas-influence
- https://www.reuters.com/markets/deals/japans-nippon-steel-plans-acquire-us-steel-7-bln-nikkei-2023-12-18/
- https://fortune.com/2024/03/31/nippon-steel-touts-tech-it-can-bring-to-us-steel/
- https://www.reuters.com/markets/deals/nippon-steel-emphasises-its-deep-roots-us-it-pursues-us-steel-deal-2024-03-31/
- https://www.politico.com/newsletters/politico-influence/2024/03/29/automakers-try-to-ward-off-an-alternative-steel-merger-00149821