U.S. Steel to be acquired by Nippon Steel in $14.1 billion buyout

The United States Steel Corporation, an industry giant with more than a century of history in Northwest Indiana, will be acquired by the Japan-based Nippon Steel in a roughly $14.1 billion cash deal, the two companies announced on Monday.

Launched in 1901, the Pittsburgh-based company was responsible for the founding of the City of Gary — named after U.S. Steel’s first Chairman Judge Elbert Gary — five years later. U.S. Steel’s presence in the city has remained an important facet of Gary’s identity even as the number of employees at the company’s Gary Works facility has declined in recent decades, driving population loss and economic decline. The facility remains the largest integrated mill in North America. It’s the eighth largest employer in Lake County and the third largest in Porter County, according to data from the commercial directory service Data Axle. The company employs more than 4,300 workers at Gary Works, according to its website.

In August, U.S. Steel rejected a $7.3 billion cash and stock buyout proposal by domestic rival Cleveland-Cliffs. U.S. Steel President and CEO David Burritt wrote that Cleveland-Cliffs’ leadership had refused to sign nondisclosure agreements as part of a due diligence process unless U.S. Steel agreed to the terms of their proposed deal in advance.

At the same time, U.S. Steel announced that it was reviewing “strategic alternatives,” launching four months of speculation and debate about the company’s future. Gary Mayor Jerome Prince cheered the prospect of a revived purchase deal with Cleveland-Cliffs, though some legal and industry experts warned that a merger of the two giants would almost certainly face roadblocks from federal antitrust regulators. U.S. Rep. Frank Mrvan, D-Highland, raised national security concerns over a possible foreign buyout.

In a news release announcing the Nippon Steel buyout, Burritt wrote that the acquisition “realizes the tremendous value today in our company and is the result of our Board of Directors’ comprehensive and thorough strategic alternatives process.”

“Today’s announcement also benefits the United States — ensuring a competitive, domestic steel industry, while strengthening our presence globally,” he continued. “Our shared decarbonization focus is expected to enhance and accelerate our ability to provide customers with innovative steel solutions to meet sustainability goals.”

Nippon Steel is Japan’s largest steel manufacturer and one of the largest in the world. The company has a presence in 15 other countries including the United States.

Eiji Hashimoto, the company’s president, wrote in the news release that Nippon Steel is “committed to honoring all of U.S. Steel’s existing union contracts.”

Mrvan lamented news of the buyout in a statement on Monday.

“I am abjectly disappointed that a foreign entity with a history of untrustworthy trade actions is exploiting American workers and members of organized labor to benefit the executives of U.S. Steel,” he wrote. “As Vice Chairman of the Congressional Steel Caucus, I will be adamant to ensure all federal antitrust regulators and the Committee on Foreign Investment in the United States are scrupulous in their assessment of this transaction. Since day one, I have stood with labor and voted to support transformational federal investments in the American steel industry, and now that we are poised for robust growth in the coming months and years from these actions, we must not allow foreign ownership of U.S. Steel to jeopardize the strength of our economy, our national security, and the livelihoods of steel-producing communities throughout our nation.”

Lake County Councilman and GOP Chairman Randy Niemeyer, R-Cedar Lake, who announced in October that he would seek his party’s nomination in May for Mrvan’s 1st District congressional seat, echoed Mrvan in his own statement, writing that “it is troubling to learn that this historic company will no longer be American-owned and operated.”

In a statement released Monday, outgoing Gary Mayor Jerome Prince said he hopes the new owner will open up more job opportunities to people who live in the city as well as engage in redevelopment of lakefront parcels near its Gary Works property.

“While the early organizers of U.S. Steel founded the City of Gary, and the company may be the largest employer located in Gary, we have seen a dramatic decrease in the number of Gary families with good paying jobs in the Gary Works plant. If federal regulators approve the sale of the iconic U.S. Steel to Nippon Steel, I hope the new owners change that trend and begin opening up more employment opportunities for Gary residents,” Prince said. “I encourage Nippon Steel to join our City leaders in discussing new opportunities for the acquisition of excess land along the lakefront.”

Gary Mayor-elect Eddie Melton, who unseated Prince in the city’s Democratic mayoral primary election in May, struck an more optimistic tone in his statement.

“It is my hope that this deal not only benefits the corporation, but the employees and the greater Gary region,” Melton wrote. “As the incoming mayor of our great city, I am committed to communicating with Nippon Steel about the significant role that U.S. Steel’s Gary Works plant has played over their 100 years in existence.”

“This could mark the beginning of a new chapter, fostering collaboration between the City of Gary and our largest corporation to address long-standing issues,” he added.

Soaring prices have helped fuel consolidation in the steel industry this decade. Steel prices more than quadrupled near the start of the pandemic to near $2,000 per metric ton by the summer of 2021 as supply chains experienced gridlock, a symptom of surging demand for goods and the lack of anticipation of that demand.

Nippon, which will pay $55 per share for U.S. Steel, said Monday that the deal will bolster its manufacturing and technology capabilities. It will also expand Nippon’s production in the U.S. and add to its positions in Japan, India and the ASEAN region.

Nippon said the acquisition is anticipated to bring its total annual crude steel capacity to 86 million tons and help it capitalize on growing demand for high-grade steel, automotive and electrical steel.

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The acquisition is expected to be finalized in the second or third quarter of 2024, the companies said, after approval by U.S. Steel’s shareholders and governmental regulators.

The Associated Press contributed.