Japan's giant steel company Nippon Steel is acquiring US Steel, a symbol of American industrialization. Once the deal is completed, Nippon Steel will rise to become the world's third-largest steel company.
According to the Wall Street Journal (WSJ) on the 18th (local time), Nippon Steel announced on the 19th that it will acquire US Steel for $14.1 billion (approximately 18.3 trillion KRW). The acquisition price per share is $55, reflecting a 40% premium over the closing price on the 15th.
Nippon Steel plans to purchase all US Steel shares and incorporate it as a wholly owned subsidiary. The acquisition is expected to be finalized around October next year after regulatory approvals. Nippon Steel stated regarding the US Steel acquisition, "The United States is the largest advanced economy market where demand for high-grade steel can be expected."
Headquartered in Pittsburgh, US Steel is a 122-year-old company founded in 1901 when John Pierpont Morgan acquired Andrew Carnegie's Carnegie Steel, the "Steel King." At one point, it was the world's largest steel company and the first company to surpass a corporate value of $1 billion.
Additionally, it was the major tenant of the Empire State Building in New York, a symbol of the city, for 75 years. At its peak in 1943, it employed about 340,000 people, and in 1953, its crude steel production reached 35 million tons.
However, in the latter half of the 20th century, it began to lose dominance to Japan, Germany, and later China, and its corporate value declined as it spun off profitable energy business segments.
Once the world's largest by market capitalization, US Steel suffered the humiliation of being removed from the S&P 500 index, which consists of the 500 largest U.S. companies, in 2014.
Nippon Steel's crude steel production last year was 44.37 million tons, ranking 4th in the world, but acquiring US Steel, ranked 27th, will elevate it to 3rd place. The Nihon Keizai Shimbun described this acquisition as "the largest-ever merger and acquisition (M&A) by Nippon Steel," and evaluated it as "a major reorganization between long-established companies from the U.S. and Japan in the steel industry."
It added, "With increasing demand for high-performance steel used in electric vehicles, the U.S. and Japan have reorganized their supply systems for critical materials," and predicted that Nippon Steel will further strengthen its U.S. operations.
Meanwhile, following the news of the sale to Nippon Steel, US Steel's stock price on the New York Stock Exchange traded at a level up 26% from the previous close during the session.
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