Nippon Steel's $14.9B Takeover of U.S. Steel -
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Nippon Steel’s $14.9B Takeover of U.S. Steel

December 19, 2023

Nippon Steel’s Bold Move to Buy U.S. Steel

The steel world is abuzz with Nippon Steel’s audacious move to take over Pittsburgh’s U.S. Steel, laying down a whopping $14.9 billion in cash. At $55 a share, Nippon Steel is ready to pay a juicy 40% more than U.S. Steel’s stock price from mid-December. This bold bid sent U.S. Steel’s shares up a brisk 26%, closing the day at just under $50.

With an eye on a bigger global role and facing a shrinking population back home, Nippon Steel is seizing the moment. The deal gets an extra push from the U.S.’s new Infrastructure Investment and Jobs Act, which is likely to boost steel needs with its “Buy American” push for infrastructure revival.

Bidding War Heats Up for U.S. Steel

The battle to snap up U.S. Steel was anything but quiet. Earlier, an offer from Cleveland-Cliffs at $7.3 billion, which mixed cash and stock, was shown the door by U.S. Steel. Nippon Steel stepped up only months later, nearly doubling the bid. Following that initial offer, U.S. Steel received additional pitches from powerhouses like ArcelorMittal and the nation’s own Nucor.

Stirring Up Controversy: Acquisition Faces Scrutiny

But it’s not all smooth sailing. The thought of a quintessential American steel giant, with over a century’s legacy, passing into foreign hands has raised some eyebrows. Industry unions and stateside politicians aren’t exactly cheering. The United Steelworkers union insists on a deep-dive regulatory review to consider what it means for national security and the jobs of U.S. workers.

And the politicians? They’re not mincing words. Pennsylvania’s Senator John Fetterman has blasted the deal as “outrageous” and is gearing up to block it. There’s rare bipartisan concern here—Senator Bob Casey (D-PA) and Senator J.D. Vance (R-OH) are also speaking out, underlining how pivotal steel is to the country’s economic backbone.

Analysts Eyeing the Future

So, what’s the verdict going to be? Market watchers and financial experts are all ears and eyes on how this plays out. Daniel Jones from SA Investing Group, who’s bullish on U.S. Steel, still has high hopes for the deal’s success.

The heads of Nippon Steel and U.S. Steel aren’t sweating the regulatory stuff too much. But even Jones agrees this needs a careful watch. If roadblocks pop up, he reckons another bid could be in the offing, hinting that U.S. Steel’s shares have little to lose at their current levels.

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