Nippon Steel Corporation intends to purchase US Steel for over $14 billion, the Japanese steelmaker tells Kallanish. The acquisition will bring Nippon closer to its targets of 100 million tonnes/year of capacity and a more international footprint.

US Steel has approximately 20m t/y of crude steel capacity, with steelworks in the US and Slovakia. Nippon Steel notes that US Steel owns one of the most advanced electric arc furnace mini mills, Big River Steel, in addition to its blast furnace-converter fleet. It also has captive iron ore mines in the USA.

The acquisition will bring Nippon Steel’s global crude steel capacity to around 86m t/y. The company says it expects the transaction to close in the second or third quarter of 2024.

Nippon Steel is targeting 100m t/y of crude steel capacity, and intends to achieve this mainly through overseas investments. It acquired Essar Steel in India jointly with ArcelorMittal in December 2019, and G Steel and GJ Steel in Thailand in March 2022. The steelmaker also notes that the US market is primarily driven by domestic demand. It expects strong high-grade steel demand and sustainable growth in domestic steel consumption in the US.

Nippon Steel adds that both companies are targeting carbon neutrality by 2050. It hopes to combine their leading technologies and further develop hydrogen injection into the blast furnace, hydrogen DRI and other low-emission steelmaking technologies.

The transaction will be carried out through a “reverse triangular merger”, whereby Nippon Steel North America (NSNA) will create a special subsidiary to merge with US Steel. The company will effectively offer US Steel shareholders $55 per share, a 40% premium on current traded prices. The acquisition will be funded by borrowing from Japanese banks. The purchase values the company at $14.1 billion, while the assumption of debt brings the total enterprise value to $14.9 billion.