This story was updated at 3:25 p.m.:Â
GRANITE CITY — Nippon Steel Corporation has agreed to acquire U.S. Steel, the owner of the 128-year-old plant in Granite City, in a deal valued at $14.1 billion.
The transaction is the latest development in what has been a tumultuous two years for workers at the Granite City plant, during which time the company has contemplated a sale of a large portion of the facility, a sale of the company, and laid off hundreds.
Granite City Mayor Michael Parkinson said he planned to meet with plant and union officials Monday to try to learn more about what the sale will mean for the facility there.
"These workers need to know that the city’s going to do anything and everything we can to get them to invest money into this plant, and to not just look at this plant as a dinosaur," Parkinson said. "We believe we make the best steel in the world."
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United Steelworkers President David McCall issued a statement Monday morning vowing to urge government regulators to scrutinize the acquisition. He said neither company had contacted the union about the deal, and that he suspects Nippon may not understand the full breadth of the union's labor contract, from the day-to-day commitments to retiree obligations.
"To say we're disappointed in the announced deal between U.S. Steel and Nippon is an understatement, as it demonstrates the same greedy, shortsighted attitude that has guided U.S. Steel for far too long," McCall said.
The union, which represents 11,000 U.S. Steel employees nationwide, had backed a bid from the Cleveland, Ohio-based steelmaker Cleveland-Cliffs. U.S. Steel rejected that offer, saying Cleveland-Cliffs had pushed to reach a deal without allowing enough due diligence.
Nippon said in a statement that it will honor all collective bargaining agreements with the United Steelworkers union.
U.S. Rep. Nikki Budzinski, D-Springfield, said she'd hoped a domestic company would buy U.S. Steel and invest in the Granite City facility. "Today's news of a foreign acquisition falls short of those hopes and leaves the future of this critical plant in jeopardy," she said in a statement Monday afternoon.Â
The future of the Granite City plant has been uncertain since last summer, when U.S. Steel revealed plans to sell a portion of the facility to Chicago-based SunCoke Energy in a deal that would eliminate nearly 1,000 of 1,450 jobs at the plant. As of earlier this month, the companies were still in discussion, and no final agreement had been announced.
In August, U.S. Steel announced that it had received bids for the entire company, and was considering a sale.
Then in September, U.S. Steel announced plans to temporarily idle the last operating blast furnace at the Granite City plant, which resulted in 400 layoffs. In November, the company said the idling would continue "indefinitely," and notified 600 additional workers that layoffs were possible.
U.S. Steel President and CEO David Burritt said in a statement that the transaction with Nippon "combines likeminded steel companies with an unwavering focus on safety, shared goals, values and strategies underpinned by rich histories."
The companies said U.S. Steel will continue to operate under its brand name, and will keep its headquarters in Pittsburgh. The deal is expected to close in the second or third quarter of 2024.
Tokyo-based Nippon agreed to acquire U.S. Steel for $55 per share, representing a 40% premium on the company's Friday share price — an offer that analysts viewed as generous.
“We in the market were pretty surprised,†said Phil Gibbs, a metals and aerospace equity analyst and managing director at KeyBanc Capital Markets. “Nippon clearly felt like if they didn’t go big, they weren’t going to have a shot.â€
Japan-based Nippon has operations in the U.S. and Mexico, as well as Asia, Europe and South America. About 12% of its sales come from North America.
By early Monday afternoon, U.S. Steel stock had risen 27% on the news.
“Nippon paid a very, very healthy price for the business,†Gibbs said.
Monday morning, Granite City and union officials had few details of how the transaction might affect the Granite City site. In its favor, Gibbs said, the plant is well-situated, with rail and barge access.
“It sits in a decent location,†he said. “You have a lot of potential customers in the central corridor… And there’s demand.â€
In the coming years, jobs in the steel industry may shift around geographically within the U.S., he added, but overall, companies will still need steelworkers.
“There’s not going to be a shortage of demand for steel employees in the country. There’s a lot going on,†Gibbs said. “There’s still a shortage of industrial workers in this country.â€