US Steel Gets a Big Buyout, But Not Everyone’s a Fan 

Once the world’s largest corporation, US Steel agreed to sell itself to Japan’s Nippon Steel for just over $14 billion in a deal.

Photo of Clairton Mill Works United States Steel Corporation
Photo by Roy Luck via CC BY 2.0

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The sign may still say “US Steel,” but ownership is heading to Tokyo. 

Once the world’s largest corporation, US Steel agreed to sell itself to Japan’s Nippon Steel for just over $14 billion in a deal announced Monday. Though regulators and steel mill employees will have their say before the deal closes, Nippon is primed to grow its presence in the US auto industry, The Wall Street Journal reported.

Steel City

The all-cash deal, expected to close late next year, values US Steel at $55 a share, a 40% premium to its share price when markets closed Friday. US Steel CEO David Burritt said on an investor call that the merger is good not only for the companies involved but the US in general as the deal “creates a more competitive market here with one of the US’ greatest allies.” 

Nippon can manufacture roughly 66 million metric tons of steel a year, but it’s seen slowing demand in its home country and is looking to expand into South Asian, Indian, and US markets, the WSJ reported. Adding US Steel would allow Nippon to produce closer to 100 million metric tons of steel a year and supply the US’ Big Three automakers, which recently settled labor negotiations and are ready to ramp up production again. The deal would also make Nippon the second-largest steel producer behind China Baowu Steel Group.

While US Steel has hinted at a sale for the past few months, the Nippon deal was a slight surprise, especially to many of the US company’s employees: 

  • This past summer, US Steel rejected an unsolicited buyout of more than $7 billion from rival Cleveland-Cliffs although the United Steelworkers union, whose members staff both steelmakers, supported the offer. However, the union opposes the deal with Nippon, with the union’s leader saying neither company sought labor’s input. 
  • “We remained open throughout this process to working with US Steel to keep this iconic American company domestically owned and operated,” Union President Dave McCall said. “Instead, it chose to push aside the concerns of its dedicated workforce and sell to a foreign-owned company.”

Together is Better: Few American brands are more steeped in history than US Steel. Founded by J.P. Morgan, Andrew Carnegie, and other industry titans 120 years ago, the company helped build everything from the United Nations Building in New York City to the San Francisco-Oakland Bay Bridge. For some, seeing it sell to a foreign company is like if Diageo bought Jack Daniels or Yamaha acquired Harley-Davidson. 

But in a rapidly polarizing world orbiting around the US and China, the deal could be a good litmus test for the US policy of friend-shoring, or concentrating manufacturing supply in the countries of traditional US allies. And Japan is as friendly as they come. Bloomberg’s Brooke Sutherland argues that “America First” and “Build America, Buy America” are popular slogans, but we live in a big, complicated world.