Luxembourg-based stainless, electrical, and specialty steel producer Aperam S.A. announced it will acquire Universal Stainless & Alloy Products, Inc., a U.S.- based steel producer, in a deal valued at $406 million. The all-cash deal is structured as a reverse triangular merger whereby Aperam will acquire all outstanding shares of Universal with cash on hand. The transaction is expected to close during Q1 2025.
“Following the closing of the transaction, Universal would provide Aperam with its first U.S. manufacturing capability and broaden its geographic presence and product range expanding its presence in high-growth sectors especially in aerospace and industrial applications,” according to the companies’ joint press release. “Universal Stainless & Alloy Products, Inc., established in 1994 and headquartered in Bridgeville, PA, manufactures and markets semi-finished and finished specialty steels, including stainless steel, nickel alloys, tool steel and certain other alloyed steels.”
The U.S. once dominated worldwide steel production, producing and estimated 60% of all steel across the globe as late at the 1950s. As the nation rapidly built railroads, highways, cars, and housing for its rapidly growing population, the nation’s steel production dwarfed other nations’. As rapid construction ended and the economy shifted toward service-based industries, U.S. production waned. At the same time, production shifted eastward: first to Japan and then to China as the nations’ industrial might provided relatively inexpensive steel supplies.
Global crude steel production has jumped 122% during 2000-2022, with China’s production ballooning by 735%, while the North America’s increased by just 18%. As of 2022, China produced 54% of steel worldwide, while North America’s share had fallen to 5.9%.
As U.S. steel production has fallen relative to China’s and other nations’, it has become a hot-button political issue. During his first administration, President Trump slapped a 25% tariff on certain steel imports, but excluded fabricated steel from China from the measure. As he plans for his next term, Trump announced a universal 10% tariff on all U.S. imports – steel from China included. The Brookings Institute calculates that such tariffs will create American jobs in the domestic steel industry but those will likely be offset by job losses in related industries that rely on inexpensive steel products.
Japan-based Nippon steel has been attempting to close its $14.9 billion acquisition of U.S. Steel before Trump, who has pledged to block the deal, takes office. In an effort to appease steelworkers unions and finalize the deal before year end, Nippon has this week agreed not import steel to the U.S. from its international mills. Whether this smaller Aperam-Universal deal will likewise face rigorous regulatory scrutiny under the new Administration remains to be seen.
According to DealPulse’s M&A database, which harnesses both AI and attorneys to digest the granular deal points of publicly-announced transactions, Aperam is advised by law firm Linklaters LLP and Universal Stainless & Alloy Products is advised by K&L Gates LLP.
