May 9 2024: Japan’s leading steelmaker, Nippon Steel, remains steadfast in its plan to finalize the acquisition of U.S. Steel by the end of the year, anticipating a boost in output and profitability, despite facing opposition in the United States.
In December, Nippon Steel made a nearly $15 billion offer to acquire the iconic U.S. Steel, encountering resistance from President Joe Biden, former President Donald Trump, and the United Steelworkers (USW) union.
Nippon Steel reaffirmed its commitment to closing the deal by year-end, pending approvals from U.S. authorities.
Earlier this month, Nippon Steel extended the deadline to end-September due to additional antitrust review requests from the U.S. Department of Justice. However, the European Commission has already granted approval for the acquisition.
The acquisition is expected to elevate Nippon Steel’s global crude steel capacity to 86 million tons annually, nearing its target of 100 million tons, and increase underlying business profit to 1 trillion yen post-March 2025, up from 935 billion yen last year.
In efforts to gain support from the USW, Nippon Steel has committed to relocating its U.S. headquarters to Pittsburgh, where U.S. Steel is headquartered, offering assurances regarding job security and additional investments.
Takahiro Mori, Nippon Steel’s vice chairman, emphasized the positive impact of the deal on U.S. Steel, including job creation and profit growth, expressing determination to finalize the transaction swiftly despite political considerations.
Nippon Steel’s recent financial results showed a net profit decline of 20.8% to 549.4 billion yen for the fiscal year ending in March, mainly due to losses from inactive facilities in Japan.
Looking ahead, Nippon Steel anticipates a net profit of 300 billion yen for the fiscal year ending in March 2025, factoring in ongoing challenges in domestic and overseas steel demand and losses from inactive facilities.
To bolster its financial position and support the acquisition, Nippon Steel plans to raise up to 250 billion yen through subordinated syndicated loans and public subordinated bonds to redeem subordinated bonds issued in September 2019.
