(NationalUSNews.com) — On Monday, December 18, Japanese company Nippon Steel announced they would be acquiring U.S. Steel for $14.9 billion, or $55 per share, which will be an all-cash settlement. This will make U.S. Steel a wholly owned subsidiary of Nippon Steel, but U.S. Steel will be keeping their name as well as their Pittsburgh headquarters. In August, U.S. Steel turned down an offer from Cleveland-Cliffs, a rival steel company, for $35 per share in a 50% cash, 50% stock deal that U.S. Steel’s President and CEO David B. Burritt called “unreasonable.”
Nippon President Eiji Hashimoto made a public statement about the acquisition, indicating that they are determined to create an increasingly “environmentally friendly society” through the “decarbonization of steel.” Steel is considered one of the hardest industries to decarbonize due to high heat requirements and using carbon as a process input, among other less production-related reasons. The Paris Accord, the international treaty on climate change, calls for carbon emissions from steel production to be lowered by 90%. Nippon Steel is aiming to hit net-zero emissions by 2050.
Japan’s crude steel manufacturing has been falling significantly. In fiscal 2007, it produced about 122 million tons, but in fiscal 2021, it was reduced to about 96 million tons. Hashimoto said that Nippon Steel believes there is sufficient economic rationale for the acquisition, stating that they want to complete a “global network for a new era” in the steel industry. This also gives Nippon Steel a stake in the American steel industry, which may be important as demand in Japan dwindles.
As the new owners of U.S. Steel, Nippon Steel has stated that they will continue to honor the collective bargaining agreements with the United Steelworkers Union. Hashimoto says that they have long had great respect for U.S. Steel’s talented workforce, rich history, and advanced technologies. U.S. Steel’s President and CEO, David Burritt, made a statement in which he mentioned how thankful he was for their employees and assured them that they were confident that this would be successful because the companies shared values and goals.
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