Osaka Steel Initiates Tender Offer for Its Common Stock
On January 30, 2025, Osaka Steel Co., Ltd., a subsidiary of Nippon Steel Corporation, announced that it will implement a tender offer for its own shares. The tender offer, scheduled to purchase up to 9,000,000 shares of its common stock, aims to increase the number of shares in circulation, a move intended to strengthen Osaka Steel’s business operations and increase its enterprise value.
Nippon Steel, the parent company of Osaka Steel, has expressed its intent to participate fully in this tender offer. The company plans to sell all shares of Osaka Steel’s common stock that it holds, pending the finalization of the tender offer terms on February 14, 2025, unless unexpected market fluctuations or other extraordinary circumstances arise before the offer price is determined. Following the transaction, the consolidated voting rights of Nippon Steel are expected to decrease to 56.1%, assuming the shares are repurchased and subsequently canceled.
Purpose Behind the Tender Offer
The main objective behind Nippon Steel’s participation in the tender offer is to cooperate with Osaka Steel’s newly-released "Medium-Term Management Plan". The company believes this move will help Osaka Steel increase its enterprise value, ultimately benefiting the Nippon Steel Group as a whole. By reducing the number of Osaka Steel shares owned by the parent company, this move is also intended to increase the percentage of tradable shares, an essential step to ensuring that Osaka Steel remains listed on the stock exchange.
This decision reflects a long-term strategy by Nippon Steel, aiming to boost Osaka Steel's financial and operational growth through a more market-friendly structure while ensuring the stability and continuity of the parent company's influence.
Impact on Nippon Steel’s Financials
Despite the strategic nature of the tender offer, Nippon Steel expects the transaction to have minimal effect on its consolidated profit or loss. The primary goal is to support Osaka Steel’s growth strategy without materially affecting the parent company’s immediate financial position. This reinforces the parent-subsidiary relationship and the broader strategy of aligning Osaka Steel’s corporate actions with long-term value creation.
Overview of Osaka Steel Co., Ltd.
Here’s a brief overview of Osaka Steel:
• Name: Osaka Steel Co., Ltd.
• Location: 3-6-1 Dosho-machi, Chuo-ku, Osaka, Japan
• Representative: Junichi Tani
• Business Description: Osaka Steel manufactures and sells a variety of steel products, including shaped steel, steel bars, billets, and processed steel products.
• Capital: 8,769 million yen
A Step Toward Enhancing Share Liquidity
By repurchasing and canceling 9,000,000 shares, the tender offer is a pivotal move in Osaka Steel's strategy to increase its share liquidity and make it more attractive to institutional investors. This effort aligns with the company’s goal to raise its market presence and ensure its long-term sustainability in the competitive steel industry.
With this initiative, Osaka Steel is not only working to bolster its business but also positioning itself for future growth and development in the rapidly evolving steel sector. The participation of Nippon Steel in the tender offer underscores its ongoing commitment to the success of its subsidiary and the broader steel sector’s transformation.
