US Steel soars on $15 billion takeover deal with Japan's Nippon Steel

Updated at 7:55 am EST

U.S. Steel  (X) - Get Free Report shares soared Monday after Japan's Nippon Steel agreed to acquire the steelmaking group for around $15 billion.

Nippon said it would pay $55 a share, about $14.1 billion, for U.S. Steel, a near 40% premium to the Pittsburgh group's Friday closing price. Including debt, the overall deal values U.S. Steel at around $14.9 billion. 

The purchase would give Nippon Steel, the world's fourth-largest steel company, a major foothold in the world's biggest economy.

U.S. Steel, which launched a strategic review of its operations in early August, rejected offers from both U.S. rival Cleveland-Cliffs  (CLF) - Get Free Report  and privately held Esmark, which value it at around $7.85 billion. France's ArcelorMittal  (MT) - Get Free Report also reportedly was interested in U.S. Steel.

Nippon Steel said it would honor all current agreements on wages and working conditions reached with the United Steelworkers Union.

"NSC has a proven track record of acquiring, operating, and investing in steel mill facilities globally – and we are confident that, like our strategy, this combination is truly best for all," U.S. Steel CEO David Burritt said in a statement. 

"This transaction realizes the tremendous value today in our company and is the result of our board of directors’ comprehensive and thorough strategic alternatives process."

U.S. Steel shares were marked 28.65% higher in premarket trading to indicate an opening bell price of $50.60 each. 

U.S. Steel-Nippon Steel pact may face challenges

The sale could still face legal and political challenges, however, after Sen. J.D. Vance (R-Ohio) earlier this year pushed the group to sell to an American buyer.

In an open letter to the group in August, Vance urged Burritt to consider "the effects of any decision to America’s industrial base and national security and insist that you reject any bids to acquire U.S. Steel or its assets from a foreign entity." 

The Committee on Foreign Investment in the U.S., better-known as CFIUS, is also expected to examine the deal, particularly given that the company stands to benefit from taxpayer funds linked to the Inflation Reduction Act.

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