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Japanese steel giant Nippon Steel is set to acquire US Steel Corp for $14.9 billion, a strategic move underpinned by US government incentives to revitalize domestic manufacturing.
The purchase price of $55 per share represents a substantial 40% premium over US Steel’s closing stock price on December 15, as confirmed by Nippon Steel in a statement. This acquisition will see Nippon Steel assuming all of US Steel’s debts.
Nippon Steel highlighted multiple factors influencing this decision, including robust domestic steel demand, evolving global economic structures, and recent US legislation. “Energy and manufacturing industries [will] return to the US under changes in the world economy structure and cheap energy in the US. The infrastructure bill and spending is expected to drive steel demand uptick moving forward,” Nippon Steel noted.
The acquisition, facilitated by tax incentives from recent US industrial legislation like the Infrastructure Investment and Jobs Act and the Inflation Reduction Act, will bolster factory construction in the country. Nippon Steel, currently the world’s fourth-largest steel producer, will significantly strengthen its production capacity through this deal.
This deal comes at a time when the steel industry is expected to benefit from significant auto sector agreements. Notably, the United Auto Workers (UAW) has secured significant wins in recent contracts with major automakers, promising a positive impact on the steel industry due to the shift towards electric vehicle production.