This $14.9 billion acquisition represents a significant step in Nippon Steel’s plan to expand its U.S. assets, and pushed the Japanese company from the fourth to the third-largest global steel producer. In total, it will now account for roughly 86 million tons per year of global production. For now, reports indicate that the expected sale close date will be in Q2 or Q3 of 2024.
The eye-watering, all-cash offer equates to a striking 7.3 times U.S. Steel’s 12-month EBITDA, which left some critical of the move. While Nippon beat out several other leading producers, including ArcelorMittal and Cleveland-Cliffs, their respective shares increased following the announcement amid investor relief. However, Nippon noted optimism within the U.S. market due to its long-term growth outlook, cheap energy, and infrastructure efforts that would fuel demand for high-grade steel.
At one time, Cliffs appeared as the front runner in the sale. This company issued a starting bid of $7.3 billion, less than half of the final sale price. The steelmaker even boasted the support of the USW union. Had it been successful, this would have given Cliffs exclusive control over domestic BOF production, which feeds the auto sector.
Source: Metal Miner