POSCO to sell entire stake in Nippon Steel, ending equity ties

POSCO Holdings Inc. has decided to sell its entire stake in Nippon Steel Corp., according to industry sources on Wednesday, marking the end of their two-decade-long cross-shareholding partnership and signaling rising trade tensions between South Korea and Japan in the steel sector.

The decision followed Nippon Steel’s announcement in September last year to unload its entire 3.4% stake, or 2.89 million shares, in POSCO Holdings. Based on share prices at the time, the stake was worth around 1.1 trillion won ($753 million).

It unveiled the decision after signing an agreement in December 2023 to acquire US Steel for $14.1 billion. It has not been disclosed whether the share sale has been executed.

"Both companies agreed on the divestment last year as part of their efforts to secure cash and to enhance corporate value," said a POSCO official. “The specific timing and method of the sale have yet to be determined.”

POSCO Holdings is looking to sell 15.69 million shares of Nippon Steel, equivalent to a 1.5% stake, with estimated proceeds of 467.8 billion won.

POSCO’s decision to dispose of Nippon Steel shares came after Seoul in February launched an anti-dumping investigation into hot-rolled steel imports from China and Japan following a petition filed by Hyundai Steel Co. in December.

Nippon Steel is among the steelmakers under investigation over the anti-dumping allegations, which could end the non-tariff policy between the countries on these products.

POSCO has yet to comment on the matter.

LONG-STANDING STRATEGIC ALLIANCE

POSCO and Nippon Steel began their cross-shareholding arrangement in May 1998, followed by a strategic partnership in August 2000 to collaborate on various international projects.

Their equity relationship had long been regarded as a symbol of South Korea-Japan steel industry cooperation. Nippon Steel contributed to the establishment of POSCO in the 1960s, providing technological support.

About 25% of the funds from Japan’s postwar reparations to South Korea, amounting to $119.5 million, were allocated to the construction of POSCO’s steel mill in Pohang near the East Sea.

Write to Jin-Won Kim at Jin1@hankyung.com
 

Yeonhee Kim edited this article.