Nippon Steel’s $14.9 Billion Acquisition of U.S. Steel
Company details: Acquirer - Nippon Steel (Japan)
Market cap: $22.7 billion (3.35 trillion JPY)
Share price: $21.2 (3115 JPY)
Founded: 1950
CEO: Eiji Hashimoto (founder and chairman since 2019)
Nippon Steel Corporation is headquartered in Tokyo and was established through the merger between Yawata Iron & Steel and Fuji Iron & Steel in 1970. However, in 2012, Nippon merged with Sumitomo Metal Industries, consolidating the Japanese steel market and making Nippon Steel & Sumitomo Metal Corporation the largest domestic steel producer. Through this, Nippon Steel Corporation was able to benefit from economies of scale advantages, as well as increase their scale and diversify their products, all furthering their competitiveness against Chinese and global steelmakers.
While Nippon’s core business remains in steelmaking, it has diversified into four major sectors: steelmaking and fabrication, engineering and construction, chemicals and materials, and system solutions. Nippon Steel is known amongst competitors for its technical edge and innovative capabilities, driven by the corporate philosophy that prioritises its manufacturing capabilities and promotes the implementation of world-leading technologies. Further, Nippon’s has successfully expanded across the globe, having established manufacturing plants in over 15 countries excluding Japan: across Asia, Europe and recently North America.
Company details: Target – US steel (United States)
Founded: 1901
Founder: J.P. Morgan
Market cap: $12.33 billion (delisted June 2025)
CEO: David Burritt
US steel was formed in 1901 as a result of the merger between the three largest domestic steel producers of the 19th century: Carnegie Steel, Federal Steel and National Steel Company. US steel was thus a consolidation of key industry players, forming the largest company in the the United States. In fact, US Steel was the first company to ever reach a capitalization of $1 billion, being set at $1.4 billion at its inception in 1901. US Steel has gone on to supply materials for military purposes, occupying a key role in national defence, as well as an essential role in domestic supply chains for other US industries.
Before being acquired by Nippon Steel, US Steel ranked the 24th largest steel producer globally in 2022, despite making up 40% of global supply and being responsible for two thirds of domestic steel production at the time of its establishment in 1901. In the past few decades US Steel has suffered due to its inability to modernise its manufacturing process, stalling its global competitiveness, as well as high operating costs. Though US Steel was once a representation of American industry, it had lost much of its edge to global competitors. Today, US Steel remains a significant player mainly serving automative, construction, energy and infrastructure markets.
Deal overview:
Value: $14.9 billion ($55 per share)
Acquirer: Nippon steel
Target: US steel
Deal closed: 18 June 2025
Deal first proposed: 18 December 2023
This deal marks a significant power shift from an influential domestically owned US company into the hands of a more lucrative foreign competitor. Nippon steel’s acquisition faced severe hinderances due to the geopolitical implications of their ownership of a principal and historical American steel producer, as well as the backlash faced at the hands of United Steelworkers (USW) union who expressed concerns about job losses in the transition of leadership. US Steel is now a wholly owned subsidiary of Nippon Steel, though the brand retains its historical name and headquarters in Pittsburgh, Pennsylvania.
The deal was pushed by both parties. Though initially exacerbated by the 1970’s steel crisis, in recent years US Steel has suffered from rising R&D costs and increased global competition. Nippon’s $14.9 billion offer guarantees US Steel a significant investment to restructure and modernise in an extremely capital-intensive industry, with Nippon committing to have invested approximately $11 billion into US Steel by 2028.
Furthermore, Nippon Steel pursued the acquisition as it would move their production capacity far closer to their long-term goal of 100 million metric tons per annum, strengthening Nippon’s position against Chinese manufacturing giants. Nippon has broken into the North American market, acquiring US Steel’s assets and avoid recent trade barriers such as the 2025 tariffs.
Legal contentions
US Steel was pressured to entertain offers after Cleveland-Cliffs made an early proposal of $7.8 billion in August 2023. This initiated a bidding war where offers were entertained from Nucor, the then largest US Steel manufacturer, as well as smaller international companies. Cleveland-Cliffs’ offer was met with scepticism, though it was favoured by the USW union as Cliffs reassured that day-to-day operations would not be significantly impacted, and union jobs would be protected. The USW union’s endorsement gave Cliffs’ a notable advantage due to the collective bargaining agreement between US Steel and the union. This guarantees that certain employment conditions, such as healthcare and pension provisions, must be granted to union members.
However, US steel was concerned that Cliffs’ early offer was an underhanded way of rushing them into a deal without conducting their due diligence and considering wider market interest. Further, there was pushback against Cliffs’ offer by the automaker industry, such as Toyota and General Motors, who feared the steel partnership would give the new enterprise monopoly power to increase automaker’s costs. Cleveland-Cliffs’ $7.8 billion proposal was ultimately rejected by US Steel in favour of Nippon Steel’s $14.9 billion all-cash bid.
However, the $14.9 billion deal was then blocked by the Biden administration through an executive order issued on January 3rd, 2025. The order cited national security and supply chain concerns as the primary reason for their interference. However, the block faced backlash from the Japanese government, who speculated that Biden blocked the deal as a political move to curry favour with the USW union.
The resistance posed to Nippon and US Steel was due to the importance of the steel sector specifically. Domestic steel producers are crucial for the function of other strategic sectors, such as technology manufacturing, that depend on reliable steel supply. Further, the importance of US Steel in defence sector, such as naval vessel manufacturing, grants the industry protected status as it concerns national security. As Biden emphasised in his January 3rd announcement; “without domestic steel production and domestic steel workers, our nation is less strong and less secure.”
The national security agreement (NSA)
Due to the political concerns expressed by both Biden’s and the subsequent Trump administration, Nippon accepted a landmark offer proposed by the US government whereby they receive a ‘golden share’ in the combined entity. This share grants the US government significant influence such as holding veto power against the closure of any US steel plants, as well as in deciding where Nippon may establish headquarters and further involvement in major strategic moves that may concern national interests. The NSA ultimately enabled the deal since the primary concern expressed by the US government was to protect national and economic security interests. By giving the government veto-power against plant closures, the document also addressed the concerns issued by labour unions, ensuring that all domestic plants remain in operation and under US management.
Throughout the entire process of acquisition, Nippon and US Steel pursued multiple joint lawsuits on January 6th, 2025, following Biden’s opposition to the deal. Nippon Steel accused Cliffs, as well as the union, of conspiring to obstruct the deals progress, using unlawful and anticompetitive measures, for example the union lobbying US Steel in favour of Cleveland-Cliffs.
Since January 2025, both lawsuits have been dropped with no financial settlement. Nippon-US steel dismissed their lawsuit against Cleveland-Cliffs and the union with prejudice, on the 3rd of September 2025 given the deal was ultimately approved by the US government in June 2025. The case against the US government was similarly dismissed once regulatory approval was granted. Thus, all litigation over the buyout deal has ceased.
The acquisition can be summarised as a resounding success, despite the 18-month long pursuit being an undoubtedly difficult process. Nippon has positioned itself extremely well for the coming years, particularly given the Trump administration’s use of paternalistic measures, such as tariffs, specifically within the steel industry in order to bolster domestic competitiveness within domestic markets. This policy measure has caused disruptions within domestic supply chains, as US steel producers are relatively inefficient compared to foreign competitors that have now been priced out of US markets. Yet, through their acquisition, Nippon steel has positioned itself to serve the US industries that have been impacted by the rising steel costs. Further, Nippon Steel approximates significant profit increases from the joint venture as, by 2028, they predict US Steel’s annual profit contribution will rise from its now $540 million to $1.7 billion. Further, they estimate their influx in capital investment will increase US Steel’s domestic crude steel capacity from 17 million to 20 million tonnes.
Future Implications
The Nippon-US steel deal will have resounding impact in how the US positions itself in the event of future foreign acquisitions of protected, strategic sectors. The NSA’s ‘golden share’ approach is the first of its kind in the history of the United States’ industrial M&A deals, and has granted unusually liberal access to the US government into the affairs of a private company. Though the legislation was crafted particularly to facilitate Nippon’s proposal, the same structure whereby the US government maintains certain powers over a private company will likely set a precedent to be echoed by The Committee of Foreign Investment in the U.S. (CIFUS) in other strategic fields.
References
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