Nippon Steel to sell POSCO shares to improve asset efficiency

(Reuters/Yonhap)

Japan’s Nippon Steel said on Tuesday it would sell a total of shares in South Korea’s POSCO Holdings to “improve asset efficiency,” ahead of a planned $14.9 billion takeover of U.S. Steel.

The Japanese steelmaker announced its decision to sell 2,894,712 shares of POSCO Holdings for 1.1 trillion won ($827 million) to improve capital efficiency in a press release on Tuesday.

Nippon Steel owned around 3.4 percent of POSCO Holdings as the third-largest shareholder following the National Pension Service) and GIC Private Ltd, a Singaporean sovereign wealth fund. The driving force behind the decision is a $15-billion-takeover bid offered by Nippon Steel to purchase U.S. Steel Corp, with additional investments of $1.4 billion in March 2024 and $1.3 billion in August. Japan‘s biggest steelmaker is reportedly planning to offload at least $211 million in assets later in the year to manage its debt ahead of the planned takeover.

POSCO Holdings owns a 1.7 percent stake in Nippon Steel. While the former said it has no immediate plans to sell its stake, saying “no specific decision has been made regarding the sale,” market analysts believe a sale is much more likely. If Nippon Steel begins to focus on U.S. Steel, the years-long relationship between the Korean and Japanese steelmakers will become harder to sustain, according to the analysts.