U.S. Steel to Be Bought by Japanese Rival After Takeover Drama

U.S. Steel agreed on Monday to sell itself to Nippon Steel for $14.1 billion, capping months of speculation about the fate of the American industrial heavyweight.

U.S. Steel, which was formed more than a century ago from a part of Andrew Carnegie’s industrial empire, has been weighing several takeover bids, including by a domestic rival, Cleveland-Cliffs. A little-known steel producer, Esmark, made an even larger bid — one that was light on details — before withdrawing days later.

In the end, U.S. Steel chose an offer by one of its biggest global competitors that was worth significantly more than Cleveland-Cliffs’ initial offer: Nippon Steel will pay $55 a share in cash, compared with the $35-a-share cash-and-stock bid that Cleveland-Cliffs made in August.

The combination with Nippon Steel would create “a truly global steel company with combined capabilities and innovation capable of meeting our customers’ evolving needs,” David B. Burritt, U.S. Steel’s chief executive, said in a statement.

The deal would add to Nippon Steel’s portfolio of plants around the world, and elevate the Japanese firm to be the world’s third-largest steel maker, after China Baowu Group and ArcelorMittal, according to 2022 production figures from the World Steel Association.

U.S. Steel, which was created by the business magnates John Pierpont Morgan and Charles Schwab, has vastly reduced sway since its heyday. The acquisition would be a further consolidation for the U.S. industry, which is made up of three other major companies: Cleveland-Cliffs, Nucor and Steel Dynamics.

The sale of a venerated American company to a foreign firm is especially notable given substantial efforts in Washington in recent years to prop up companies like U.S. Steel.

American presidents have directed trade protections and subsidies at domestic steel makers in recent years to try to bolster the industry. Former President Donald J. Trump imposed a 25 percent tariff on most steel imports during his term. Mr. Trump and President Biden later renegotiated many of those tariffs into quota arrangements, in which foreign governments agreed to limit the amount of steel they exported to the United States.

Steel has enjoyed a recent boom period under such protections and legislation like the Bipartisan Infrastructure Law and the Inflation Reduction Act, which have helped drive up steel demand and prices by limiting competition from foreign markets.

But U.S. steel makers have struggled to compete against low-price, subsidized metals made by foreign competitors including China, which now accounts for more than half of global steel production.

The sale of U.S. Steel is a symbolic coda for a major player in the growth of the U.S. economy in the first half of the 20th century. Feats of American architecture and engineering like the Willis Tower in Chicago; the New River Gorge Bridge near Fayetteville, W.Va.; and the United Nations Building in New York were all built from products made by U.S. Steel. The company supplied hundreds of millions of tons of steel to the American military during the most consequential conflicts of the 20th century.

But the company has faced challenges for decades because of intensifying foreign competition, and it has carried out multiple reorganizations and acquisitions to try to stay afloat. In an effort to diversify, U.S. Steel acquired an oil company — Marathon Oil — in 1982, only to spin it off in 2001.

U.S. Steel currently runs nearly two dozen facilities around the United States, as well as a steel-making plant in Slovakia. The plants use massive machinery to transform molten steel into solid slabs, roll them into thinner sheets or bend them into tubes, and send them on to automakers, oil drillers and other industrial firms.

The United Steelworkers union, which represents most of the workers from U.S. Steel, has reacted angrily to the prospect of being purchased by a foreign firm. It had said it would accept offers only from Cleveland-Cliffs, which is also represented by the same union. The union ratified a four-year contract with U.S. Steel in December 2022, which states that a buyer has to come to terms on a new labor agreement before it completes the acquisition.

In the deal announcement on Monday, Nippon Steel said it would honor all agreements between U.S. Steel and the union, including collective bargaining pacts.

The United Steelworkers slammed the company’s decision in a statement Monday, saying it demonstrated “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 work force and sell to a foreign-owned company,” it said.

The union said it would urge government regulators to scrutinize the transaction to determine whether it served the country’s national security interests.

Analysts at BMO Capital Markets said that Nippon Steel’s bid came as a surprise, and that the price it offered was even “a bigger surprise,” representing a “hearty” valuation for U.S. Steel. But the union’s resistance to the deal has “the potential to complicate the transaction,” they said.

Lauren Hirsch and Santul Nerkar contributed reporting.

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