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US Steel’s bonds rallied after it clinched a $14.9bn all-cash acquisition deal from Japan’s Nippon Steel. The Japanese steelmaker’s offer beat those from rivals like Cleveland-Cliffs, ArcelorMittal and Nucor. The deal price is at $55/share, a 41% premium to US Steel’s closing price of $39/share on Friday. As compared to Cleveland-Cliffs’ offer of $35/share in August, it represented a 57% premium. Reuters notes that the deal is a bet on US Steel being likely to benefit from spending and tax incentives in President Biden’s infrastructure bill. Nucor had offered to acquire US Steel in partnership with another unnamed company, as per sources, adding that ArcelorMittal had also considered a potential offer. With the deal, Nippon Steel is touted to benefit with nearly 100mn mt of global crude steel capacity, while significantly expanding its production in the US. Nippon Steel is the fourth largest steelmaker in the world. LSEG data notes that Nippon is paying 7.3x US Steel’s 12-month EBITDA.
US Steel’s 6.875% 2029s were up 1.3 points to 102.07, yielding 5.85% and its 6.65% 2037s were up 2.9 points to 102.73, yielding 6.34%
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