A major US union representing steelworkers slammed the deal by Japan’s Nippon Steel to buy US Steel Corp for $14.1 billion, which was confirmed on Monday just months after US Steel rejected an offer from its main domestic rival.
The leading Japanese steelmaker will acquire the company in an all-cash deal at $55 per share, a 40 percent premium above its closing price on Friday and representing an equity value of about $14.1 billion, the companies said in a statement.
Nippon will also assume the US firm’s debt, taking the total deal to $14.9 billion.
The US company’s share price surged more than 27 percent after the move was announced.
– USW slams deal –
Although traders on Wall Street liked the deal, the United Steelworkers (USW) union was unimpressed by the announcement.
In a statement, USW International President David McCall said the deal demonstrated “the same greedy, shortsighted attitude that has guided U.S Steel for far too long.”
“Neither US Steel nor Nippon reached out to our union regarding the deal, which is in itself a violation of our partnership agreement that requires US Steel to notify us of a change in control or business conditions,” he added.
Nippon Steel said in a statement that it would honor all collective bargaining agreements with USW, as part of a “commitment to maintaining strong stakeholder relations.”
US Steel launched a strategic review in August after receiving several unsolicited offers for a partial or total takeover.
It rejected an offer from its main US competitor Cleveland-Cliffs, which valued the merger at around $10 billion.
USW had indicated it supported the deal put forward by Cleveland-Cliffs.
– Expanding production –
The acquisition will significantly expand Nippon’s current production in the United States to an annual crude steel capacity of 86 million metric tons.
“We are excited that this transaction brings together two companies with world-leading technologies and manufacturing capabilities, demonstrating our mission to serve customers worldwide,” Nippon Steel President Eiji Hashimoto said in a statement.
He added that the deal also underscored the firm’s “commitment to building a more environmentally friendly society through the decarbonisation of steel.”
“Today’s announcement also benefits the United States -– ensuring a competitive, domestic steel industry, while strengthening our presence globally,” US Steel President and CEO David Burritt said.
“Our shared decarbonisation focus is expected to enhance and accelerate our ability to provide customers with innovative steel solutions to meet sustainability goals,” he added.
US Steel’s appeal, according to analysts and industry insiders, stems from the fact it is about to complete a costly investment plan, including the installation of electric arc furnaces instead of coal-fired blast furnaces, to reduce its carbon footprint.
Both boards of directors have unanimously approved the deal, which is subject to approval by US Steel’s shareholders, the firms said.
Nippon Steel has some 160,000 workers globally, including in Japan, India, Brazil, Thailand and Sweden.
The firm has had a presence in the United States for around four decades, and currently employs around 4,000 people — 620 of which are USW workers.
US Steel, which was founded in 1901 and had almost 23,000 employees at the end of last year, has its manufacturing facilities in the United States and Slovakia.
