Japan's Nippon to acquire US Steel in $14 billion deal

Purchase will create world's second-largest steel company, and biggest outside of China

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• 86 mt Capacity of the steel giant created from the deal
• $7.25 bn Offer made by Cleveland-Cliffs that was rejected

Nippon Steel Corp. will buy United States Steel Corp. for $14.1 billion to create the world's second-largest steel company and the biggest outside of China - with a key role in supplying American manufacturers and automakers.

The deal caps months of uncertainty over the future of US Steel, an icon of American industry, which has been considering potential transactions since it rejected an offer from rival Cleveland-Cliffs Inc. for $7.25 billion in mid-August.

For Nippon, Japan's biggest steel producer, the transaction provides a large foothold in the American steel industry at a time when domestic demand is poised to benefit from rising infrastructure spending. US Steel is a key supplier to the profitably automotive market in particular. The Japanese company has been seeking growth overseas to offset a litany of challenges facing its current operations.

Nippon will pay $55 a share in cash, the companies said in a statement. The deal is a 14.2% premium to US Steel's share price on the last trading day before it announced the review and Cliffs revealed it had made a bid. The company's shares surged 28% in premarket trading. Rivals Cliffs and Nucor Corp. also rose.