Nippon Steel to Sell Stake in Alabama Plant If US Steel Bid Succeeds

U.S. Steel employees rally outside the United Steel Tower in downtown Pittsburgh, on Sept. 4, 2024. Gene J. Puskar/AP Photo

Japan’s Nippon Steel said on Oct. 11 that it would sell its entire stake in a joint venture steel plant in Calvert, Alabama if it was successful in acquiring United States Steel.

Nippon Steel said it would sell its 50 percent stake in the Calvert plant to its joint venture partner, ArcelorMittal, for $1 to clear antitrust concerns and receive “timely regulatory approval” for the U.S. Steel deal.

“The share transfer aims to proactively address any antitrust concerns that may arise from Nippon Steel’s ongoing ownership in Calvert following the acquisition,” the company said in a statement.

Luxembourg-based ArcelorMittal also confirmed that it had agreed with the Japanese steelmaker to address regulatory concerns related to Nippon Steel’s buyout bid for U.S. Steel.

Under the agreement, Nippon Steel would inject cash and forgive loans totaling around $900 million, but the transaction is contingent upon the completion of the Nippon-U.S. Steel deal, the company said.

ArcelorMittal said there are no guarantees that Nippon Steel will complete its acquisition of U.S. Steel, which is valued at $14.9 billion.

“Should NSC [Nippon Steel Corporation] not complete its acquisition of [U.S. Steel], then the agreement will not come into effect and the AM/NS Calvert Joint Venture will continue,” the company said in a statement.

Nippon Steel stated that it expects to record a loss of approximately 230 billion yen ($1.54 billion) as a result of the sale of its stake in the Calvert plant, but did not elaborate further.

The Tokyo-based steelmaker said that its proposed buyout of U.S. Steel is expected to be finalized by the fourth quarter of the year, subject to regulatory requirements.

U.S. Steel first announced the proposed deal in December 2023, sparking opposition from President Joe Biden, Vice President Kamala Harris, and several other politicians who raised national security concerns.

Former President Donald Trump said in January that he would block the proposed Nippon-U.S. Steel merger deal  “instantaneously” if he wins the November election.

An arbitration board ruled in favor of Nippon Steel’s buyout of the American-owned company in September.

The board, jointly selected by U.S. Steel and the United Steelworkers (USW) union to settle disputes, said U.S. Steel had met its obligations under the successorship clause of its basic labor agreement with the USW.

While the arbitration ruling clears a significant hurdle for U.S. Steel’s acquisition by Nippon Steel, the deal still faces regulatory scrutiny from the Committee on Foreign Investment in the United States (CFIUS), which is reviewing the transaction for potential national security risks.

U.S. Steel plays a major role in national security, as steel is the main material used in building ships, airplanes, ammunition, and firearms.

Tom Ozimek contributed to this report.