Nippon Steel Corp. will buy United States Steel Corp. for about $14.1 billion, the two companies said Monday, in an all-cash deal that will create the world's third-largest steel maker by volume.
Nippon Steel will make the major U.S. steelmaker a wholly owned subsidiary as it seeks to tap increasing demand for high-grade steel products in the world's largest economy.
The deal is expected to be closed in the second or third quarter of 2024, subject to approval by the U.S. firm's shareholders and U.S. regulators, they said.
According to the World Steel Association, Nippon Steel was the world's fourth biggest steelmaker in 2022, producing about 44 million tons of crude steel, while U.S. Steel ranked 27th with about 14 million tons.
The combined output will make Nippon Steel the world's No. 3 steelmaker after China Baowu Group and ArcelorMittal SA.
The deal will increase the Japanese company's global crude steel production capacity to about 86 million tons per year and pave the way for achieving its goal of 100 million tons per year, it said.
The offer price of $55 per share represents a 40 percent premium on the U.S. company's closing price of $39.33 on Friday, Nippon Steel said.
Nippon Steel is looking to bolster its operations overseas as the domestic business is expected to slow due to the country's shrinking population and a shift by domestic manufacturers to production abroad.
U.S. Steel said in August it was considering various strategic measures, including selling itself.
"We are excited that this transaction brings together two companies with world-leading technologies and manufacturing capabilities," Nippon Steel President Eiji Hashimoto said in a release.
U.S. Steel Chief Executive Officer David Burritt said the deal "also benefits the United States, ensuring a competitive, domestic steel industry, while strengthening our presence globally."
Nippon Steel has a global crude steel production capacity of about 66 million tons, employing about 100,000 people, according to the company.
U.S. Steel, founded in 1901 and headquartered in Pittsburgh, Pennsylvania, has a raw steelmaking capacity of 22.4 million tons, it said.
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