REGIONAL— U.S. Steel, which has played a pivotal role in the development of northeastern Minnesota’s iron resources for more than a century, is being sold to Japan-based Nippon Steel. It’s an all-cash deal valued at $55 per share of stock, or an estimated $14.1 billion.
With the assumption of debt, U.S. Steel says the deal, announced Monday, is worth a total of $14.9 billion.
U.S. Steel owns and operates the Minntac and Keetac taconite operations in Virginia and Keewatin and is a part-owner of Hibbing Taconite as well. About 1,400 workers are employed at Minntac, with another 400 or so at the Keetac facility. A company statement indicates that Nippon Steel intends to live up to existing labor agreements and continue its relationship with its union workers going forward.
The U.S. Steel stock price, which closed at the end of last week at just over $39 a share, jumped sharply on Monday’s news and was quickly trading at over $50 per share. The transaction is expected to close in the second or third quarter of calendar year 2024, subject to approval by U. S. Steel’s shareholders, receipt of customary regulatory approvals and other customary closing conditions.
Spokesmen for both companies say the acquisition will create significant advantages for the expanded company. “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,” said Eiji Hashimoto, Nippon’s president.
“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,” said David B. Burritt, U.S. Steel President and CEO. “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.”
The announced acquisition comes four months after the U.S. Steel board of directors rejected a tender offer by Cleveland-Cliffs that would have netted shareholders about $35 per share, or a total value of about $7.3 billion.
The offer from Cleveland-Cliffs had the support of the United Steelworkers, the union representing nearly 850,000 industrial workers nationwide, including the roughly 11,000 U.S. Steel workers around the country. But the union slammed the deal announced this week. “To say we’re disappointed in the announced deal between U.S. Steel and Nippon is an understatement, said USW International President David McCall. “It demonstrates the same greedy, shortsighted attitude that has guided U.S. Steel for far too long. We remained open throughout this process to working with U.S. Steel to keep this iconic American company domestically owned and operated, but instead it chose to push aside the concerns of its dedicated workforce and sell to a foreign-owned company.”
McCall said the announcement was a violation of the union’s partnership agreement with U.S. Steel, which requires the company to notify the union of a change in corporate control or major business conditions. “Our union intends to exercise the full measure of our agreements to ensure that whatever happens next with U.S. Steel, we protect the good, family-sustaining jobs we bargained. We also will strongly urge government regulators to carefully scrutinize this acquisition and determine if the proposed transaction serves the national security interests of the United States and benefits workers.
The union does maintain the right under its contract to provide U.S. Steel with a counter-offer, and a union statement suggests that could be a possibility. “No union has actively engaged in more acquisitions in its core industries than the USW, and rest assured, our union will hold management at U.S. Steel accountable to every letter of our collective bargaining and other existing agreements,” said McCall.