The Japanese company Nippon Steel closed an agreement this Monday to buy US Steel for 14.9 billion dollars in cash (about 13.6 billion euros at the current exchange rate), winning the auction for the emblematic 122-year-old steel company over rivals such as Cleveland-Cliffs and the giant ArcelorMittal. Under the terms of the deal, the century-old steelmaker's $55 per share price represents a 142% premium over Aug. 11, the last day of trading before Cleveland-Cliffs made a cash offer of $35 per share. .
“We are sure that it is really the best for everyone,” said the head of US Steel, David Burritt, in a video call with investors held this Monday. “Today's announcement also benefits the United States: it ensures a competitive domestic steel industry, while strengthening our presence around the world.” US Steel will retain its public name and remain headquartered in Pittsburgh.
The sale of US Steel occurs in a context of protection of the local industry, undertaken by the Administration of President Joe Biden, with the aim of reducing dependence on China and, at the same time, promoting employment. One of the most notable points of his electoral campaign in 2020, reflected in numerous government measures, was the program Made in America, a clear commitment to local production. US Steel was no longer the leading company in the sector in recent years, but the Biden Administration's commitment to electric vehicles, in the manufacture of which steel plays a key role, makes the operation strategic.
The Cleveland-Cliffs move in August led US Steel to begin the sale process. Its board of directors concluded this Sunday that Nippon's option was superior to that of Cleveland-Cliffs, even after it raised the offer to a high range of $40 per share, according to sources consulted by the Reuters agency.
ArcelorMittal also coveted US Steel, the agency reports. The conglomerate of Indian origin, headquartered in Luxembourg, sold its US business to Clevenland-Cliffs in 2020 for $1.2 billion, in a combination of cash and shares, making it the leading US company. in the production of flat rolled steel and iron ore pellets. Nippon and ArcelorMittal own a joint plant in Alabama that makes steel sheets from semi-finished products, or slabs, purchased from local and foreign suppliers. They are also investing about $1 billion in an electric arc furnace.
The acquisition of US Steel will help Nippon, the world's fourth largest steelmaker, reach 100 million tonnes of global crude steel capacity, while significantly expanding its production in the US, where steel prices are expected to rise. as the production of electric vehicles increases, also promoted by the Biden Administration's green agenda. US Steel also supplies material to the renewable energy industry and can benefit from the Inflation Reduction Act (IRA), which offers tax credits and other incentives for these types of projects, something that attracted suitors. .
According to the Japanese company, all US Steel commitments to its employees will be respected, including current collective agreements. Despite these assurances, the powerful United Steelworkers (USW) union, which had supported the sale to Cliffs because it has a highly unionized workforce, said it opposed the acquisition by Nippon because it does not trust that labor agreements will be maintained. The purchase and sale operation takes place just a month after massive strikes in the country's main automotive plants ended with significant salary increases and other benefits for workers. The Nippon and Arcelor joint venture is non-unionized.
The sale of US Steel represents the latest step in the gradual decline of the iconic company, which was once the largest on the planet. It was one of the first large conglomerates and a symbol of American industrial power, which at the end of the 19th century forged the fortunes of the so-called gilded age (golden age), so defining in the modern layout and design of the country's main cities. Until the 1940s, coinciding with the Second World War, and with a workforce of 340,000 workers for the war effort, it dominated the sector. Years ago, its strength had been surpassed by Nucor Steel and in 2022 its workforce consisted of only 15,000 employees.
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