News Summary
U.S. Steel’s shares rose after Japan’s Nippon Steel announced its intention to acquire the American steel company for $14.9 billion. Nippon Steel announced it would pay $55 per share for U.S. Steel, a 40% increase over the closing price on Friday. The deal is expected to close in the second or third quarter of 2024.
Details of the News
Shares of U.S. Steel (X) jumped more than 26% at the start of trading on Monday after Nippon Steel Corporation, Japan’s largest steel company, agreed to purchase the iconic American company for $14.9 billion.
Nippon Steel announced that it would pay $55 per share for U.S. Steel shares, a 40% increase from the American steel company’s stock price at the end of trading on Friday.
The deal has already been unanimously approved by the boards of directors of Nippon Steel and U.S. Steel and is subject to the approval of U.S. Steel shareholders and regulatory authorities and “other customary closing conditions.” The acquisition is expected to be finalized in the second or third quarter of 2024.
Information about U.S. Steel and Nippon Steel
U.S. Steel is an iconic American company formerly known as the Carnegie Steel Company, which monopolized the steel industry and was the first company in the world to surpass a market capitalization of one billion dollars.
Currently, Nippon Steel is one of the largest steel producers in the world, ranking as the fourth largest steel producer by the World Steel Association with a production of 44.37 million tons of crude steel in 2022. In comparison, U.S. Steel’s production was approximately 14.49 million tons during the same period. Japan’s production was estimated at around 89.2 million tons of crude steel in 2022, making it the third largest steel-producing country after China and India, while the United States’ production was estimated at around 80.5 million tons.
The Japanese steel company stated in the announcement: “As a result of NSC’s acquisition of U.S. Steel, the total expected annual crude steel production capacity will reach 86 million tons, accelerating NSC’s progress toward its strategic goal of reaching 100 million tons of global crude steel production capacity annually.” If the acquisition closes, U.S. Steel will retain its “iconic name and headquarters in Pittsburgh.”
Market Response
U.S. Steel shares rose 26.2% to $49.60 per share at around 10:25 a.m. Eastern Time on Monday following the news.
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Source: https://www.investopedia.com/us-steel-sold-to-nippon-steel-8417283
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