Japanese megabanks to provide Nippon Steel with $16 billion to acquire US Steel

The Japanese steelmaker may issue bonds and new shares to raise funds after the takeover is completed

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 the 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 that the acquisition goes through,» said a Nippon Steel spokesman.

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.

Earlier, 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 the banks said they do not comment on individual transactions.

Nippon Steel in December 2023 agreed to acquire US Steel for $14.1 billion. Since then, the deal has been criticized by trade unions and members of Congress, and is currently being reviewed by the US government for national security reasons.

Lorenzo González, CEO of Cleveland-Cliffs, has called the decision to take over US Steel from a Japanese steelmaker, rather than his company, a mistake. He and Chelsea Gonsalves, Cliffs’ CFO, commented on the deal during a conference call with analysts, the WSJ reports. In December, the US Steel 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 the board of directors of U.S. Steel was eager to sell the company to a foreign buyer.

As GMK Center reported earlier, 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.

In addition, Takahiro Mori, executive vice president of the Japanese steel company, met with members of the U.S. Congress to discuss how the acquisition would benefit all stakeholders.