TOKYO & PITTSBURGH-- Nippon Steel Corporation (NSC) (TSE: 5401), Japan’s largest steelmaker and one of the world’s leading steel manufacturers, and United States Steel Corporation (NYSE: X) (“U. S. Steel”), a leading steel producer with competitive advantages in low-cost iron ore, mini mill steelmaking, and best-in-class finishing capabilities, today announced that they have entered into a definitive agreement pursuant to which NSC will acquire U. S. Steel in an all-cash transaction at $55.00 per share, representing an equity value of approximately $14.1 billion plus the assumption of debt, for a total enterprise value of $14.9 billion. The $55.00 per share purchase price represents a 40% premium to U. S. Steel’s closing stock price on December 15, 2023. The transaction has been unanimously approved by the Board of Directors of both NSC and U. S. Steel.

NSC’s acquisition of U. S. Steel will enhance its world-leading manufacturing and technology capabilities and enable it to expand the geographic areas in which NSC can better serve all of its stakeholders, including customers and society at large. The transaction will further diversify NSC’s global footprint by significantly expanding its current production in the United States, adding to its primary geographies of Japan, ASEAN, and India. As a result of NSC’s acquisition of U. S. Steel, its expected total annual crude steel capacity will reach 86 million tonnes - accelerating progress towards NSC’s strategic goal of 100 million tonnes of global crude steel capacity annually.

NSC President Eiji Hashimoto said, “We are excited that this transaction brings together two companies with world-leading technologies and manufacturing capabilities, demonstrating our mission to serve customers worldwide, as well as our commitment to building a more environmentally friendly society through the decarbonization of steel. NSC has long admired U. S. Steel with deep respect for its advanced technologies, rich history, and talented workforce and we believe we can jointly take on the challenge of raising our aspirations to even greater heights. The transaction builds on our presence in the United States and we are committed to honoring all of U. S. Steel’s existing union contracts. We look forward to collaborating closely with the U. S. Steel team to bring together the best of our companies and move forward together as the ‘Best Steelmaker with World-Leading Capabilities’.”

NSC Executive Vice President Takahiro Mori said, “We believe this transaction is in the best interests of our two companies, providing strong, immediate value for U. S. Steel shareholders while enhancing NSC’s long-term growth prospects. We have a strong balance sheet and are confident in our ability to unlock the potential of bringing together NSC and U. S. Steel through advancement in steelmaking, creating long-term value for our companies’ stakeholders, including our customers, employees, suppliers, communities, and shareholders.”

President and Chief Executive Officer of U. S. Steel, David B. Burritt, said, “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. 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. For our U. S. Steel employees, who I continue to be thankful for, the transaction combines like-minded steel companies with an unwavering focus on safety, shared goals, values, and strategies underpinned by rich histories. For customers, U. S. Steel and NSC create a truly global steel company with combined capabilities and innovation capable of meeting our customers’ evolving needs. Today’s announcement also benefits the United States - ensuring a competitive, domestic steel industry, while strengthening our presence globally. Our shared decarbonization focus is expected to enhance and accelerate our ability to provide customers with innovative steel solutions to meet sustainability goals.”

Strategic Benefits

· Moving Forward Together as the ‘Best Steelmaker with World-Leading Capabilities.’ The transaction combines cutting-edge technologies across NSC and U. S. Steel to advance innovation and deliver high-grade steel products, such as electrical steel and automotive flat steel to customers around the world. NSC and U. S. Steel will share their world-leading technologies and manufacturing capabilities to be at the forefront of innovation and digital transformation in steelmaking for the benefit of customers. U. S. Steel is a proven innovator in energy efficiency, with Big River Steel operating one of the most advanced, state-of-the-art sustainable mills in North America. Synergies from the transaction will be primarily driven by bringing together advanced production technology and know-how between U. S. Steel and NSC, including in cost-effective operations, energy savings, and recycling. NSC’s technology and products will further advance the technical capabilities of U. S. Steel’s Mined, Melted and Made in America portfolio of products, better supporting the evolving demand of customers in the United States.

· Strengthens Ability to Address Growing Demand for High-Grade Steel in U.S. and Globally. U. S. Steel has long been one of America’s steel industry leaders, while NSC has been serving U.S. customers successfully for decades. Together with U. S. Steel, NSC will be well-positioned to capitalize on the growing demand for high-grade steel, automotive and electrical steel, and provide excellent products and services. Further, NSC is committed to serving customers in the United States and deliver high-performance steel products to meet the needs of every application.

· Drives the Global Steel Industry Towards Decarbonization and a Sustainable World. NSC and U. S. Steel share a commitment to decarbonize by 2050 and recognize that solving sustainability challenges is a fundamental pillar of a steelmaker’s existence and growth. A key area of collaboration post-transaction will be to continue to advance this goal and drive alternative technologies in decarbonization. NSC is developing three breakthrough technologies to progress towards its goal of achieving carbon neutrality by 2050, including hydrogen injecting technology into blast furnaces, high grade steel production in large size electric arc furnaces, and hydrogen use in direct iron reduction process. U. S. Steel is similarly focused on reducing its carbon footprint, including continuously striving to use less energy in its existing operations, integrating electric arc furnace capabilities into its footprint, and is constructing a second state-of-the-art mini mill in Arkansas.

· Honors All Agreements between U. S. Steel and the United Steelworkers Union: NSC has a strong track record of safety in the workplace and working collaboratively with unions. All of U. S. Steel’s commitments with its employees, including all collective bargaining agreements in place with its unions, will be honored and NSC is committed to maintaining these relationships uninterrupted.

· Commits to Maintaining Strong Stakeholder Relations, Including with Employees, Customers, Suppliers and Communities. The combined workforce is critical to operations in the United States and globally. Following the closing of the transaction, U. S. Steel will retain its iconic name, brand, and headquarters in Pittsburgh, PA. NSC is committed to continuity in strong relationships with U. S. Steel’s suppliers, customers, the surrounding communities, and people that support U. S. Steel’s operations and is committed to being a productive member of these communities.

· Creates Significant Value for Both NSC and U. S. Steel Shareholders. The transaction accelerates NSC’s growth as ‘Best Steelmaker with World-Leading Capabilities,’ poised to deliver higher growth, enhanced profitability, and long-term value for NSC shareholders. The all-cash offer also provides strong value creation and certainty of value for U. S. Steel shareholders. This transaction is the successful outcome of a comprehensive and robust strategic review conducted by U. S. Steel and its Board of Directors. The $55.00 per share purchase price represents a 40% premium to U. S. Steel’s closing stock price on December 15, 2023.

Transaction Details

The transaction is expected to close in the second or third quarter of calendar year 2024, subject to approval by U. S. Steel’s shareholders, receipt of customary regulatory approvals and other customary closing conditions. NSC plans to fund the transaction through proceeds mainly from borrowings from certain Japanese banks and has already secured financing commitments. The transaction is not subject to any financing conditions.

Advisors

Citi is acting as financial advisor to NSC. Ropes & Gray LLP is acting as legal advisor to NSC. Barclays Capital Inc., Goldman Sachs & Co. LLC and Evercore are acting as financial advisors to U. S. Steel. Milbank LLP and Wachtell, Lipton, Rosen & Katz are acting as legal advisors to U. S. Steel.

Conference Call

NSC and U. S. Steel will hold a conference call to discuss the proposed acquisition with analysts and investors today, December 18, 2023 at 8:00 am EST in the U.S. (10:00 pm JST in Japan). To listen to the webcast of the conference call and to access the slide presentation, visit the U. S. Steel website, www.ussteel.com, and click on the “Investors” section. A replay will be available after the call on U. S. Steel’s investor relations website: https://investors.ussteel.com/.