A leading Japanese steelmaker has confirmed its acquisition of US Steel Corp for a whopping $14.1 billion in an all-cash deal, causing a stir in both financial markets and labor unions.
The acquisition, finalized on Monday, was priced at $55 per share, a remarkable 40 percent premium over US Steel’s closing price on the previous Friday.
The deal, which includes the assumption of the US company’s debt, brings the total value to $14.9 billion. Following the announcement, US Steel’s share price surged by more than 27 percent, indicating positive sentiment among Wall Street traders.
However, not everyone is cheering for this major business move.
The United Steelworkers (USW) union expressed strong dissatisfaction with the deal.
USW International President David McCall criticized the acquisition, stating that it reflects “the same greedy, shortsighted attitude that has guided U.S Steel for far too long.” McCall further highlighted a violation of the partnership agreement, claiming that neither US Steel nor Nippon reached out to the union regarding the deal.
Nippon Steel, in response, pledged to honor all collective bargaining agreements with USW, emphasizing a commitment to maintaining strong stakeholder relations.
The acquisition is poised to significantly boost Nippon’s production capacity in the United States, reaching an annual crude steel capacity of 86 million metric tons.
Nippon Steel President Eiji Hashimoto expressed enthusiasm, citing the union of two companies with world-leading technologies and manufacturing capabilities, aligning with their mission to serve customers globally.
US Steel’s President and CEO, David Burritt, lauded the deal as beneficial for both nations.
He emphasized the commitment to building a more environmentally friendly society through the decarbonization of steel, aligning with Nippon Steel’s focus on sustainability goals.
Analysts and industry insiders point to US Steel’s appeal.