Nippon Steel: Acquiring an Iconic American Steelmaker

In December 2023, Nippon Steel Corporation, Japan’s largest steel production company, announced plans to acquire United States Steel Corporation (U. S. Steel) for US$14.1 billion. Just four years earlier, the company experienced a ¥430 billion deficit for its 2019 fiscal year. After the appointment of a new president in 2019, however, Nippon Steel successfully achieved a V-shaped recovery, rescuing it from the verge of bankruptcy. Immediately after the recovery, the president was already aiming for further global expansion. The proposed acquisition—the attempt of a Japanese steelmaker to acquire an iconic 123-year-old American steelmaker— drew immediate attention from various US sectors and stirred emotion among key stakeholders. But for Nippon Steel, was now the right time, financially speaking, to invest as much as US$14.1 billion in an acquisition? As domestic demand for steel was decreasing due to Japan’s declining birthrate and aging population, Nippon Steel needed to expand its business operations globally before it was too late.

The case highlights the numerous challenges arising from a cross-border acquisition. It has been developed for use in master of business administration and undergraduate courses focusing on international business, market entry, and global business strategy. The case reveals various fundamental issues surrounding a cross-border acquisition in a mature industry. Cross-border acquisitions pose various advantages and disadvantages for a firm expanding globally. Nippon Steel’s planned acquisition of an iconic American steel-maker encompasses a number of unique and significant factors. Through analyzing these, students will be able to do the following:<ul><li> Understand how a company can gain market power in a very mature industry where only a limited number of businesses operate.</li><li>Analyze the industrial environment surrounding a cross-border acquisition, and consider what factors may have a significant impact on acquiring a local business overseas.</li><li>Evaluate what intangible assets (such as human resources and innovative technology) are transferable from the domestic market to a foreign market, and how to utilize these to establish a core competency and develop a sustainable core competitive advantage overseas.</li><li>Identify an acquired company’s critical concerns and analyze them to develop solutions that are mutually beneficial to both the acquiring and acquired side. </li></ul>

• cross-border acquisitions