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Rain of criticism after the sale of US Steel to the largest Japanese steel producer

The unions and Senator Fetterman regret the sale of the company to a foreign country and call to block the operation, which is valued at $14.9 billion.

Instalación de U.S. Steel en

(Instalación de U.S. Steel /Wikimedia Commons)

Published by
Israel Duro Alejandro Baños

The Japanese Nippon Steel Corporation (NSC) has reached an agreement to buy US Steel Corporation for 14.1 billion dollars. As the most important steel company in Japan, NSC will also assume the debt of the American company, raising the total value of the transaction to 14.9 billion dollars. The agreement has drawn criticism from unions, and even Senator John Fetterman announced that he will do "everything I can to block it."

A $14.9 billion operation

The board of directors of both companies approved the agreement and announced it through a statement on their respective websites, detailing the price that the Japanese steel company will pay for each share in cash.

Nippon Steel Corporation (NSC), Japan’s largest steelmaker and one of the world’s leading steel manufacturers, and United States Steel Corporation today announced that they have entered into a definitive agreement pursuant to which NSC will acquire U. S. Steel in an all-cash transaction at $55.00 per share, representing an equity value of approximately $14.1 billion plus the assumption of debt, for a total enterprise value of $14.9 billion. The $55.00 per share purchase price represents a 40% premium to U. S. Steel’s closing stock price on December 15, 2023. The transaction has been unanimously approved by the Board of Directors of both NSC and U. S. Steel.

86 million tons of steel per year

In the words of the president of the Japanese entity, Eiji Hashimoto, the deal will allow his company to reach the production of 86 million tons of steel annually, and consolidate the group as one of the great leaders in the sector throughout the world and contribute to the decarbonization of the steel. Hashimoto also promised to respect current union contracts:

We are excited that this transaction brings together two companies with world-leading technologies and manufacturing capabilities, demonstrating our mission to serve customers worldwide, as well as our commitment to building a more environmentally friendly society through the decarbonization of steel. NSC has long admired U. S. Steel with deep respect for its advanced technologies, rich history, and talented workforce and we believe we can jointly take on the challenge of raising our aspirations to even greater heights. The transaction builds on our presence in the United States and we are committed to honoring all of U. S. Steel’s existing union contracts. We look forward to collaborating closely with the U. S. Steel team to bring together the best of our companies and move forward together as the "Best Steelmaker with World-Leading Capabilities.”

Advance in more ecological steel production

For his part, the president and CEO of US Steel, David B. Burritt, highlighted the strength of the Japanese company and assured that its clients will benefit from the operation. In addition, he insisted on the importance of the purchase to advance the more ecological production of steel:

This transaction realizes the tremendous value today in our company and is the result of our Board of Directors’ comprehensive and thorough strategic alternatives process. For our U.S. Steel employees, who I continue to be thankful for, the transaction combines like-minded steel companies with an unwavering focus on safety, shared goals, values, and strategies underpinned by rich histories. For customers, U. S. Steel and NSC create a truly global steel company with combined capabilities and innovation capable of meeting our customers’ evolving needs. Today’s announcement also benefits the United States –ensuring a competitive, domestic steel industry, while strengthening our presence globally. Our shared decarbonization focus is expected to enhance and accelerate our ability to provide customers with innovative steel solutions to meet sustainability goals.

Unions denounce US Steel's 'greedy, shortsighted attitude'

A reading with which the unions of the American firm do not agree. In fact, in a press release issued by the United Steelworkers Union, the president of the union, David McCall begins by asserting that "to say we’re disappointed in the announced deal between U.S. Steel and Nippon is an understatement, as it demonstrates the same greedy, shortsighted attitude that has guided U.S. Steel for far too long." In addition, the union was very critical of the sale of a company that is fundamental to the American economy to a foreign company.

McCall, furthermore, denounced that "neither U.S. Steel nor Nippon reached out to our union regarding the deal, which is in itself a violation of our partnership agreement that requires U.S. Steel to notify us of a change in control or business conditions."

Fetterman will do "everything possible to block him"

Also expressing his discontent with the operation was John Fetterman, senator from Pennsylvania, a state with a significant number of steel plants. In a video published on X (formerly known as Twitter), the legislator even assures that he will do everything possible to block the agreement. "It is absolutely outrageous that they have been sold to a foreign nation, and to a company. The steel industry also always has to do with safety. "I'm going to fight for the steelworkers and their union way of life here."

After learning of the deal, US Steel Corporation's stock market value skyrocketed, sending its shares up more than 26% on Wall Street.

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