$14.9B Nippon, US Steel Deal Finalized

A Big River Steel employee looks on at the plant's electric arc furnace. (Courtesy U.S. Steel)

Nippon Steel announced Wednesday that it has completed its acquisition of Pittsburgh-based U.S. Steel, a year-and-a-half after the Japanese company first proposed its deal to buy the iconic American steelmaker for nearly $15 billion.

A press release from Tokyo-based Nippon claimed the partnership will create more than 100,000 jobs through “unprecedented massive investments” in steelmaking across U. S. Steel’s footprints, including in Arkansas, Pennsylvania, Indiana, Minnesota and Alabama.

U.S. Steel, which completed its purchase of Big River Steel in Osceola in 2021, is building a $3 billion plant, Big River 2, in the community and describes the plant as one of the most advanced steel mills in the world.

The merger totaled $55 a share according to an SEC filing, with the companies entering into a National Security Agreement (NSA) with the United States government, which requires several provisions.

Under the NSA, the companies have agreed to measures to “protect national security,” including allowing U.S. Steel to retain its name and headquarters.

Nippon Steel will also be required to make approximately $11 billion in new investments in U.S. Steel by 2028, which includes an initial investment in a greenfield project that will be completed after 2028.

That greenfield project is estimated to cost another $3 billion by completion after 2028, according to sources close to the deal. The new capital commitments include spending to replace and upgrade the existing hot strip mill at U.S. Steel’s Mon Valley Works and to save Gary Works’ Blast Furnace #14 in Gary, Indiana, which is U. S. Steel’s largest blast furnace.

Nippon Steel’s capital investments will also “revitalize, enhance and expand” other U.S. Steel facilities, including those in Arkansas.

Also under the NSA, a majority of the members of U.S. Steel’s board of directors must be U.S. citizens, and key management personnel, including its CEO, will be U.S. citizens.

The company is also required to maintain capacity to produce and supply steel from its U.S. production locations to meet market demand in the U.S.

Finally, under the NSA, Nippon Steel will not prevent, prohibit or otherwise interfere with U.S. Steel’s ability to pursue trade action under U.S. law.

Pursuant to the NSA and through the ownership of a Golden Share, the U.S. government will have certain rights, including, among others:

• The right to appoint one independent director; and
• Consent rights of the President of the United States, or a designee, on specific matters, including:
  • Reductions in the committed capital investments under the NSA
  • Changing U.S. Steel’s name and headquarters
  • Redomiciling U.S. Steel outside of the United States
  • Transfer of production or jobs outside of the United States
  • Material acquisitions of competing businesses in the United States
  • Certain decisions on closure or idling of U.S. Steel’s existing U.S. manufacturing facilities, trade, labor and sourcing outside of the United States

With this partnership, the Nippon Steel Group’s annual crude steel production capacity is expected to reach 86 million tons, bringing it closer to Nippon Steel’s global goal of 100 million tons of global crude steel production capacity.

“Nippon Steel is excited about opening a new chapter of U.S. Steel’s storied history,” Eiji Hashimoto, Nippon Steel’s representative director, chairman and CEO, said in the press release. “Building on our investment, the transfer of our advanced technologies, and the unwavering efforts of management and the employees of both companies, Nippon Steel is committed, together with U.S. Steel, to solidifying its position as the world’s leading steelmaker.”

“Through our partnership with Nippon Steel, we are poised to grow better and bigger, with transformative investment, cutting-edge technology and the creation of good-paying jobs across the United States,” U.S. Steel’s CEO Dave Burritt said in the release.

U.S. Steel did not immediately respond to requests for comment.