Japanese steelmaker may issue bonds and new shares to raise funds after acquisition completes
Japan's three largest banks – Sumitomo Mitsui Financial Group, Mitsubishi UFJ Financial Group and Mizuho Financial Group – plan to provide Nippon Steel with a loan totaling $16 billion for its planned acquisition of US steelmaker US Steel. This was reported by Reuters .
“We have received a letter of commitment to provide loans totaling $16 billion from three Japanese megabanks, provided the acquisition closes,” said a Nippon Steel spokesperson.
According to a source familiar with the situation, Sumitomo Mitsui plans to provide $6.5 billion, Mitsubishi UFJ – $5.5 billion, Mizuho – $4 billion of the total loan volume.
Previously, Bloomberg reported that the loan term is one year. The Japanese steelmaker is expected to issue bonds and new shares to raise funds after the acquisition is completed. Nippon Steel declined to comment on the latest information and banks said they do not comment on individual transactions.
Nippon Steel agreed in December 2023 to acquire US Steel for US$14.1 billion. Since then, the agreement has been criticized by unions and members of Congress and is currently being reviewed by the US government for national security reasons.
Lorenzo González, CEO of Cleveland-Cliffs, called the decision to acquire US Steel from a Japanese steelmaker instead of his company a mistake. He and Chelsea Gonsalves, CFO of Cliffs, commented on the deal during a conference call with analysts, the WSJ reports . In December, US Steel's board of directors chose Nippon Steel's $55 per share cash offer over Cleveland-Cliffs' $54 per share cash and stock offer.
According to Lorenko Gonçalves, they were unable to offer a better price because US Steel's board of directors was eager to sell the company to a foreign buyer.
As we previously reported, a group of multinational companies is calling on the US government to conduct an objective analysis of the proposed acquisition of US Steel by Japan's Nippon Steel without political context. The letter was published by the Global Business Alliance (GBA), which represents international companies in the United States.
Additionally, Takahiro Mori, executive vice president of the Japanese steel company, met with members of the US Congress to discuss how the acquisition would benefit all stakeholders.
