TOKYO : Nippon Steel shares sank more than 5 per cent early on Tuesday after it clinched a deal to buy U.S. Steel for $14.9 billion in cash.
The acquisition of U.S. Steel, which prevailed in an auction for the steel giant over rivals including Cleveland-Cliffs, will help Nippon Steel move toward 100 million metric tons of global crude steel capacity.
The Japanese company has not given any projection on the value of the synergies that will arise from the deal, but it is scheduled to hold a media briefing on Tuesday morning where the company’s president is expected to appear.
LSEG data showed Nippon is paying the equivalent of 7.3 times U.S. Steel’s 12-month earnings before interest, taxes, depreciation and amortisation (EBITDA).
Nippon Steel’s shares were trading around 3,061 yen in early trade in Tokyo, down 5.5 per cent from Monday’s close, after being untraded with a glut of sellers after the open.
U.S. Steel shares ended trading up 26 per cent at $49.59 on Monday
following the deal announcement.