US Steel, NSC say merger has been finalized

In a move tied to the transaction, steelmaker ArcelorMittal says it has completed its acquisition of Nippon Steel’s stake in a Calvert, Alabama, mill complex.

steel coils
One commitment listed in a June 18 press release calls for Nippon Steel to make approximately $11 billion in new investments in U. S. Steel by 2028.
Photo courtesy of U.S. Steel Corp.

Eighteen months after the deal was announced, Japan-based Nippon Steel Corp. says it has completed its acquisition of Pittsburgh-based United States Steel Corp., though the transaction has been reframed as a partnership between the two companies.

“Together, Nippon Steel and U.S. Steel will be a world-leading steelmaker with best-in-class technologies and manufacturing capabilities,” the companies say in a June 18 news release issued by NSC, U.S. Steel and Nippon Steel North America Inc.

The long-delayed transaction was not completed until the companies involved agreed to enter into a national security agreement (NSA) with the U.S government that will entail the issuance of a golden share or stake in the company to the federal government.

The NSA includes numerous provisions or obligations for the steelmaking firms. In a separate move made to allay potential antitrust concerns, Nippon Steel also agreed to sell its stake in a recycled-content electric arc furnace (EAF) mill and downstream production complex in Calvert, Alabama, to fellow steel producer ArcelorMittal.

Luxembourg-based ArcelorMittal says that equity purchase agreement, made last October, now has been completed, giving it full ownership of the campus that had been known as AM/NS Calvert. The facility has been renamed ArcelorMittal Calvert.

“We have invested considerably and transformed the facility into a highly strategic steelmaking asset, capable of producing the highest quality, low-carbon-emissions steels and with considerable further opportunity to grow,” ArcelorMittal CEO Aditya Mittal says of the Calvert location.

Aspects of the NSA spelled out by U.S. Steel and NSC include several pertaining to NSC commitments to steel production in the U.S. and several others spelling out what rights the golden share assigns to the U.S. government.

Commitments identified in the June 18 news release call for Nippon Steel to make approximately $11 billion in new investments in U.S. Steel by 2028, including an initial investment in a greenfield project that will be completed after 2028, which some reports have indicated will be a recycled-content EAF mill.

Additionally, U.S. Steel will remain a U.S.-incorporated entity and will maintain its headquarters in Pittsburgh, according to the companies, which also noted a majority of the members of U.S. Steel’s board of directors will be U.S. citizens, as will key management personnel, including its CEO.

“This is a momentous day for our country, our communities and the American steel industry," U.S. Steel CEO David Burritt says. "U.S. Steel will remain rooted in the United States and continue to call Pittsburgh home. Through our partnership with Nippon Steel, we are poised to grow better and bigger, with transformative investment, cutting-edge technology and the creation of good-paying jobs across the United States.”

Regarding the golden share, the U.S. government will have certain rights, including the right to appoint one independent director, presumably to U.S. Steel or Nippon Steel North America Inc., according to the companies.

The news release also indicates the president of the U.S. or his designee will have decision-making powers regarding reductions in the committed capital investments under the NSA; changing U.S. Steel’s name and headquarters; redomiciling U.S. Steel outside the United States; the transfer of production or jobs outside the United States; material acquisitions of competing businesses in the U.S; and certain decisions on closure or idling of U.S. Steel’s existing U.S. manufacturing facilities, trade, labor and sourcing outside the United States.

Executives from NSC and U.S. Steel indicate they are ready to move forward with the agreement in place.

“I am very pleased that the partnership between Nippon Steel and U.S. Steel has been realized thanks to President [Donald] Trump’s historic and visionary decision,” NSC Chair and CEO Eiji Hashimoto says.

“Nippon Steel is excited about opening a new chapter of U. S. Steel’s storied history. Nippon Steel is committed, together with U.S. Steel, to solidifying its position as the world’s leading steelmaker.”

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Takahiro Mori, another Nippon Steel director, who will now serve as chairman of the board at U.S. Steel, adds, “Since announcing our deal, I have engaged in extensive dialogue with many stakeholders, including the employees of U.S. Steel, government officials and community leaders, and I would like to express my sincere gratitude to all of them for their tremendous cooperation and support for this partnership, [and] we look forward to building a stronger and brighter future for U.S. Steel.”

NSC will hold its annual general meeting June 24 in Tokyo. Heading into that meeting, the steelmaker announced the transfer of its shares in the Calvert mill to ArcelorMittal will result in a restructuring charge on its next financial statement.

As a result of the share transfer, Nippon Steel expects to record approximately 230 billion yen ($1.59 billion) as a loss on reorganization in its consolidated financial statements upon completion of the share transfer.

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