money Japan's Nippon Steel to acquire US Steel in $14.9B deal
Japan's Nippon Steel is acquiring US Steel (X) for $14.9 billion including debt, in an all-cash transaction. The deal follows months of uncertainty for US Steel after the company rejected Cleveland-Cliffs's $7.25 billion unsolicited offer in August.
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Video Transcript
SEANA SMITH: Shares of US Steel surging this morning after announcing that it will be acquired by Japan's Nippon Steel in a nearly $15 billion deal. Now, this deal is expected to close in the second or third quarter of 2024 after getting unanimous approval from both company boards. You can see the stock reaction right now with shares surging just over 25%.
Brad, we have been talking about a potential acquisition of US Steel going back to the middle of the summer, about August, I believe, was when we first heard talk that there was interest from rival, Cleveland-Cliffs. Now, much of that focus was surrounding what exactly that would mean for the US Steel industry, right?
Because if we did see a player come out-- a domestic player come out and buy US Steel, that of course, then would bring the number of larger players here in the US market from four to three. That is not happening with this deal. So I think that's really the significant part of this, and we're seeing the excitement just about the valuation and how much the deal is valued at reflected in the stock price here this morning.
BRAD SMITH: Yeah. This is a deal if it does fully go through way that the average investor out there can kind of also look at this as a foreign investment into a major US Steel company. And now, what does that mean for some of where we're seeing the international kind of, you know, handshake agreements but then also formalized agreements where there's a lack of even being able to sell chips into certain regions right now?
And so this could be the wave of M&A that actually proceeds into next year if you were to see multinational organizations go after specific commodities on a nation-by-nation basis. And then it'd be up to regulators to decide, OK, are you going to approve and ultimately let this go through, and have a foreign entity essentially owning what is a major commodity here in the US.
I think that's the larger question that we have to think about going into 2024 as well. And if that does proceed, exactly how much money could be sloshing around because of the international funds that enter into the M&A environment as well?
