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Released December 19, 2023 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--After months of being on the selling block, iconic U.S. company United States Steel Corporation (NYSE:X) (U.S. Steel) (Pittsburgh, Pennsylvania) has announced that it will be sold to Japan's Nippon Steel (Tokyo).
U.S. Steel went up for grabs in August when rival steelmaker Cleveland-Cliffs Incorporated (NYSE:CLF) (Cleveland, Ohio) made a $7.3 billion offer for the company in a move that surprised many. U.S. Steel rejected this initial offer, but began evaluating other proposals, including a later increased bid from Cleveland-Cliffs. For additional information, see August 17, 2023, article - New Dawn Approaching for U.S. Steel Industry after Cleveland-Cliffs Offer.
Other bids soon followed, with the three top players in the final evaluation being Nippon, Cleveland-Cliffs and global steel giant ArcelorMittal (NYSE:MT) (Luxembourg, Luxembourg). Nippon's accepted bid of $14.1 billion in an all-cash deal ($14.9 billion when including the assumption of debt) represents a price of $55 per share, a 142% premium to August 11, the day before Cleveland-Cliffs made its initial offer.
News of the deal was met with mixed responses. Cleveland-Cliffs Chief Executive Officer (CEO) Lourenco Goncalves expressed some disappointment and highlighted what he considers the under-valuation of the overall U.S. steel industry. "We identified U.S. Steel as an extremely undervalued company with significant synergy potential when combined with Cleveland-Cliffs, creating a union-friendly American champion among the top-10 steelmakers in the world," he said in a company press release. "Even though U.S. Steel's Board of Directors and CEO chose to go a different direction with a foreign buyer, their move validates our view that our sector remains undervalued by the broader market, and that a multiple re-rating for Cleveland-Cliffs is long overdue."
ArcelorMittal was silent about the transaction; the company is partners with Nippon at plants in India, and the two companies are joint owners of a carbon steel processing plant in Calvert, Alabama. The two companies, under the joint subsidiary AM/NS Calvert LLC, are constructing a new electric arc furnace (EAF) at the plant that will produce 1.5 million tons per year of steel slabs and is expected to go into operation late next year. Subscribers to Industrial Info's Global Market Intelligence (GMI) Metals & Minerals Project Database can click here for the project report.
The United Steelworkers (USW) union, which includes 11,000 U.S. Steel employees, had heavily endorsed the offers from Cleveland-Cliffs as another unionized U.S.-based steel company. USW President David McCall expressed frustration at the 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," he said in a USW release issued in response to the transaction. "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. 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."
McCall also said USW would do what it could to block the transaction. "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," he said. The deal is expected to close in the second or third quarter of next year. U.S. Steel will retain its name and Pittsburgh headquarters, becoming a subsidiary of Nippon.
Nippon did its best to emphasize its capabilities as U.S. Steel's future owner, saying that it would honor all U.S. Steel's commitments to employees, including all collective bargaining agreements in place with the union. In an interview with Reuters, Nippon Executive Vice President Takahiro Mori emphasized the company's union shops in the U.S. "Standard Steel and Wheeling-Nippon Steel that we own are unionized companies in the United States; we have a good history of working with unions," said Mori.
Nippon became the majority owner of Standard Steel LLC (Burnham, Pennsylvania) in 2012 through a merger with Sumitomo Metal Corporation, which had acquired Standard Steel the previous year. Standard Steel's Burnham plant manufactures steel wheels and axles for the U.S. rail sector and, according to the company, is the only producer of forged steel wheels for railcars and locomotives in North America. Subscribers to Industrial Info's Metals & Minerals Plant Database can click here for the plant profile.
Nippon Steel formed Wheeling-Nippon in 2020 upon another corporate merger in April 2020. The company has a plant in Follansbee, West Virginia, that specializes in hot-dip, coated products. Subscribers can click here for the plant profile.
While Mori emphasized that Standard Steel and Wheeling-Nippon were unionized, Nippon's joint-venture plant with ArcelorMittal in Alabama is not.
Should the acquisition go through, Nippon will be gaining U.S. Steel's active projects. Among the largest of these is the addition of a steel minimill at its Big River steel complex in Osceola, Arkansas. The project entails constructing two EAFs with a combined 3 million tons per year of output and an endless casting and rolling line along with advanced finishing capabilities. At one of the complex's existing minimills, U.S. Steel is adding a new 325,000-ton-per-year galvanizing line. Together, the projects represent more than $3.2 billion at the site. Both projects are expected to be completed next year. Subscribers can learn more by viewing the project reports about the new minimill and galvanizing line addition.
Subscribers to Industrial Info's GMI Metals & Minerals Database can click here to view reports for all of the projects discussed in this article and click here for the plant profiles.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 trillion (USD).
U.S. Steel went up for grabs in August when rival steelmaker Cleveland-Cliffs Incorporated (NYSE:CLF) (Cleveland, Ohio) made a $7.3 billion offer for the company in a move that surprised many. U.S. Steel rejected this initial offer, but began evaluating other proposals, including a later increased bid from Cleveland-Cliffs. For additional information, see August 17, 2023, article - New Dawn Approaching for U.S. Steel Industry after Cleveland-Cliffs Offer.
Other bids soon followed, with the three top players in the final evaluation being Nippon, Cleveland-Cliffs and global steel giant ArcelorMittal (NYSE:MT) (Luxembourg, Luxembourg). Nippon's accepted bid of $14.1 billion in an all-cash deal ($14.9 billion when including the assumption of debt) represents a price of $55 per share, a 142% premium to August 11, the day before Cleveland-Cliffs made its initial offer.
News of the deal was met with mixed responses. Cleveland-Cliffs Chief Executive Officer (CEO) Lourenco Goncalves expressed some disappointment and highlighted what he considers the under-valuation of the overall U.S. steel industry. "We identified U.S. Steel as an extremely undervalued company with significant synergy potential when combined with Cleveland-Cliffs, creating a union-friendly American champion among the top-10 steelmakers in the world," he said in a company press release. "Even though U.S. Steel's Board of Directors and CEO chose to go a different direction with a foreign buyer, their move validates our view that our sector remains undervalued by the broader market, and that a multiple re-rating for Cleveland-Cliffs is long overdue."
ArcelorMittal was silent about the transaction; the company is partners with Nippon at plants in India, and the two companies are joint owners of a carbon steel processing plant in Calvert, Alabama. The two companies, under the joint subsidiary AM/NS Calvert LLC, are constructing a new electric arc furnace (EAF) at the plant that will produce 1.5 million tons per year of steel slabs and is expected to go into operation late next year. Subscribers to Industrial Info's Global Market Intelligence (GMI) Metals & Minerals Project Database can click here for the project report.
The United Steelworkers (USW) union, which includes 11,000 U.S. Steel employees, had heavily endorsed the offers from Cleveland-Cliffs as another unionized U.S.-based steel company. USW President David McCall expressed frustration at the 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," he said in a USW release issued in response to the transaction. "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. 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."
McCall also said USW would do what it could to block the transaction. "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," he said. The deal is expected to close in the second or third quarter of next year. U.S. Steel will retain its name and Pittsburgh headquarters, becoming a subsidiary of Nippon.
Nippon did its best to emphasize its capabilities as U.S. Steel's future owner, saying that it would honor all U.S. Steel's commitments to employees, including all collective bargaining agreements in place with the union. In an interview with Reuters, Nippon Executive Vice President Takahiro Mori emphasized the company's union shops in the U.S. "Standard Steel and Wheeling-Nippon Steel that we own are unionized companies in the United States; we have a good history of working with unions," said Mori.
Nippon became the majority owner of Standard Steel LLC (Burnham, Pennsylvania) in 2012 through a merger with Sumitomo Metal Corporation, which had acquired Standard Steel the previous year. Standard Steel's Burnham plant manufactures steel wheels and axles for the U.S. rail sector and, according to the company, is the only producer of forged steel wheels for railcars and locomotives in North America. Subscribers to Industrial Info's Metals & Minerals Plant Database can click here for the plant profile.
Nippon Steel formed Wheeling-Nippon in 2020 upon another corporate merger in April 2020. The company has a plant in Follansbee, West Virginia, that specializes in hot-dip, coated products. Subscribers can click here for the plant profile.
While Mori emphasized that Standard Steel and Wheeling-Nippon were unionized, Nippon's joint-venture plant with ArcelorMittal in Alabama is not.
Should the acquisition go through, Nippon will be gaining U.S. Steel's active projects. Among the largest of these is the addition of a steel minimill at its Big River steel complex in Osceola, Arkansas. The project entails constructing two EAFs with a combined 3 million tons per year of output and an endless casting and rolling line along with advanced finishing capabilities. At one of the complex's existing minimills, U.S. Steel is adding a new 325,000-ton-per-year galvanizing line. Together, the projects represent more than $3.2 billion at the site. Both projects are expected to be completed next year. Subscribers can learn more by viewing the project reports about the new minimill and galvanizing line addition.
Subscribers to Industrial Info's GMI Metals & Minerals Database can click here to view reports for all of the projects discussed in this article and click here for the plant profiles.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 trillion (USD).
