U.S. Steel to be bought by Japanese company for $14.9B, but will keep name, Pittsburgh HQ

U.S. Steel would retain its name and headquarters in Western Pennsylvania under a $14.9 billion deal announced Monday with Japan’s largest steelmaker, but ownership of the venerable Pittsburgh company would be shipped overseas.

The deal comes after months of speculation and U.S. Steel weighing multiple offers from suitors.

In the end, Nippon Steel Corp., the world’s fourth-largest steel producer, came out on top.

“Today’s announcement also benefits the United States, ensuring a competitive domestic steel industry while strengthening our presence globally,” U.S. Steel President and CEO David Burritt said in a prepared statement.

Nippon’s offer was significantly higher than others made for U.S. Steel. In August, Cleveland-Cliffs offered $7.3 billion for U.S. Steel and Sewickley-based industrial conglomerate Esmark offered $7.8 billion.

U.S. Steel was founded 122 years ago by business titans including Andrew Carnegie, J.P. Morgan and Charles Schwab and has been based in Pittsburgh since. At one time, it was the largest producer of steel and the largest company in the world.

Japan's Nippon Steel clinched a deal to buy US Steel for $14.9 billion in cash, prevailing in an auction for the 122-year-old iconic steelmaker over rivals including Cleveland-Cliffs, ArcelorMittal and Nucor https://t.co/fBO0ae9yuapic.twitter.com/rI1EzQcdXy

— Reuters (@Reuters) December 19, 2023

The company is headquartered in Downtown Pittsburgh and operates facilities locally in the Mon Valley, including the Clairton Coke Works in Clairton and Edgar Thomson Steel Works in Braddock, one of the last major steel mills remaining in the Pittsburgh area.

U.S. Steel employs more than 3,700 people across Pennsylvania, including more than 3,000 at the Mon Valley facilities. It’s not yet clear how the deal might affect the Mon Valley facilities and the company as a whole.

Burritt anticipated the deal would close in the second or third quarter of 2024, at which point U.S. Steel will become an indirect subsidiary of Nippon. U.S. Steel said the deal is subject to approval by the company’s shareholders, receipt of customary regulatory approvals and other standard closing details. Burritt said he did not anticipate any problems securing the necessary approvals.

The United Steelworkers labor union and Democratic U.S. Sens. John Fetterman — the onetime mayor of Braddock — and Bob Casey were critical of the deal.

United Steelworkers, which represents unionized workers at U.S. Steel, ripped the sale and said neither U.S. Steel nor Nippon reached out to the union regarding the deal.

Steelworkers President David McCall said the sale demonstrates a greedy and shortsighted attitude by U.S. Steel.

“USW does not believe that Nippon understands the full breadth of the obligations of all our agreements, and we do not know whether it has the capacity to live up to our existing contract,” McCall said. “This includes not just the day-to-day commitments of our labor agreement but also significant obligations to fund pension and retiree insurance benefits that are the most extensive in the domestic steel industry.”

Burritt said in a morning conference call that labor agreements ratified in September 2022 will remain in effect and Nippon is committed to maintaining them. Nippon already has more than 600 United Steelworkers employees in the United States, he said.

“We will continue to operate our mining and steelmaking facilities in the U.S. for our U.S.-based customers,” Burritt said.

Nippon Executive Vice President Takahiro Mori said the company “will honor U.S. Steel’s commitments to its employees, including all collective bargaining agreements.”

Fetterman, D-Braddock, said on social media that he thought the acquisition of U.S. Steel by a foreign company is “wrong for workers and wrong for Pennsylvania.”

“It’s absolutely outrageous that they have sold themselves to a foreign nation and a (foreign) company. Can’t do that. Steel is always about security as well, too. And I am committed to doing anything I can do from using my platform or my position in order to block this,” Fetterman said in a video posted to X, formerly known as Twitter.

Casey, D-Scranton, also expressed concerns.

“The United States’ marquee steel company should remain under American ownership,” Casey said. “I’m concerned about what this means for the steelworkers and the good union jobs that have supported Pennsylvania families for generations; for the long-term investment in the commonwealth; and for American industrial leadership.”

State Senate President Pro Tempore Kim Ward, R-Hempfield, said she was encouraged by the deal.

“While details of the sale are still to be determined, it’s encouraging to hear the collective bargaining agreements will be honored and U.S. Steel will remain a part of the fabric of our community,” she said.

Stock price jumps

Nippon, which traces its roots to the mid-20th century, has a proven track record in the steel industry, Burritt said, and he’s confident the acquisition will be best for all parties. He also cited the companies’ “shared decarbonization focus.” Decarbonization is the reduction or elimination of carbon dioxide emissions from manufacturing.

Nippon offered to buy U.S. Steel for $55 a share, 40% more than the company’s closing stock price of $39.33 a share on Friday. News of the deal sent U.S. Steel’s stock soaring. It opened Monday at $49.77 a share and was trading at more than $50 a share by afternoon.

University of Pittsburgh regional economist Chris Briem called Monday’s announcement an extraordinary moment in Pittsburgh’s history.

“I think U.S. Steel as a concept has been in the region since before U.S. Steel had even come into existence as a company,” Briem said, noting that its founding in 1901 resulted from the merger of three steelmakers, including the former Carnegie Steel Company, which had facilities across the Pittsburgh region and a history reaching back to the early 1890s.

“Generations of workers, generations of businesses have been shaped by the local steel industry.”

Nippon President Eiji Hashimoto said the companies can “jointly take on the challenge of raising our aspirations to even greater heights.”

“(Nippon) has long admired U.S. Steel with deep respect for its advanced technologies, rich history and talented workforce,” Hashimoto said.

Eye on ‘renewable energy revolution’

Nippon and U.S. Steel create similar products, and Burritt said the deal will provide U.S. Steel customers with a global suite of automotive products, including expanded options for electrical vehicle products.

“Together with their global portfolio, we will be better able to serve the electric vehicle, renewable energy revolution right here in the United States,” Burritt said.

When the deal closes, Nippon will have about 86 million tons of annual crude steel capacity, Mori said. In 2022, Nippon was the world’s fourth-largest steel producer while U.S. Steel was the 24th largest, according to World Steel Association data.

Nippon is excited to add U.S. Steel’s new electric arc mills in Arkansas to its portfolio, Mori said. U.S. Steel recently completed construction of a mill in Osceola, Ark., and is working on a second mill that is expected to be completed in 2024.

Electric arc furnace mills use electricity to power steel production. Older, more traditional mills such as the Edgar Thomson Steel Works are powered by fossil fuels.

Nippon and U.S. Steel are looking to decarbonize their facilities by 2050, Mori said. It was not immediately clear how that will impact the plants in the Mon Valley.

Local impact

The sale will impact two components of the local workforce: white-collar employees who work at the headquarters in Pittsburgh and blue-collar workers at the industrial facilities in the Mon Valley, Briem said.

Early statements from Nippon and U.S. Steel indicate the company will maintain a strong, white-collar workforce in the Pittsburgh region, Briem said. Because U.S. Steel will remain a subsidiary of Nippon, it should keep its headquarters presence similar to where it stands now, he said.

The future for U.S. Steel’s blue-collar workers is more uncertain, he said.

Long before U.S. Steel started to shop for buyers, the company began shifting investment away from traditional steelmaking like it does in the Mon Valley and toward more technological and efficient steelmaking in the South.

In 2021, U.S. Steel canceled more than $1 billion in upgrade plans for the Mon Valley Works. Following that cancellation, the company started to increase investment in electric arc steelmaking in Arkansas.

Electric arc steelmaking technology has advanced over the years, Briem said, allowing steelmakers to create products that typically only traditional steelmaking could produce. He said he doesn’t expect the sale to jump-start any regional steelmaking expansion for Pittsburgh.

“There is not going to be a lot of growth in the steel industry in Southwestern Pennsylvania in the near future,” he predicted.

Correction: This story was updated to clarify information related to electric arc furnaces.