The global steel industry is undergoing a massive merger and acquisition deal - Japanese steel giant NSC will acquire US Steel Corp, a veteran American steel company, which may change the global landscape of the industry.
Just a few days after the announcement of the merger, official documents showed that one of the protagonists of the merger, David B. Burritt, CEO of American Steel, had sold 250000 shares of the company's stock and cashed it out.
In a document submitted to the United States Securities and Exchange Commission (SEC), Burritt sold 252458 shares worth $12.6 million on Monday (December 18) at a price of $50.013 per share.
And the day of sale coincided with the announcement of the acquisition transaction. On Monday Eastern Time, Japanese steel giant New Nippon Steel (NSC) announced that it will acquire American Steel in an all cash transaction of $55.00 per share, equivalent to an equity value of approximately $14.1 billion, with a total investment of $14.9 billion in debt to be borne.
The explanation from American Steel Company is that the CEO's stock sale plan was already set in June of this year, and the stock price increase triggered by the acquisition news happened to reach the target price set by the CEO earlier.
"David Burritt has a 10b5-1 plan as part of his personal financial plan established in early June," explained Amanda Malkowski, a spokesperson for American Steel
It is reported that many executives will submit a 10b5-1 trading plan, indicating in advance that they will sell stocks within the specified time window and proving that the sale of stocks is not based on significant non-public information. These plans allow executives to sell stocks in a predictable manner, thereby minimizing the tension caused to other investors.
The email also stated, "The plan stipulated the sale of stocks at a predetermined price, and when David formulated the plan, the stock price of American Steel was $22.63 per share. The planned sale price was $49.87, and the company's stock price reached this level after the acquisition news, triggering the sale."
Therefore, according to SEC regulations, Burritt's trading is allowed as part of a predetermined plan prior to the announcement of the transaction.
Stock price "roller coaster"
At the beginning of the announcement of this transaction, it was welcomed by investors, and the stock price of American Steel surged 26% on Monday, but later on, it was constantly changing. The deal has faced opposition from key Democratic lawmakers and the United Steelworkers of America.
The United Steelworkers of America has repeatedly stated that it will only support the acquisition offer of another American steel company, Cleveland Cleves.
The union's chairman, David McCall, bluntly stated that the deal between American Steel and Nippon Steel revealed a greedy and short-sighted development strategy in the industry for a long time. As an iconic company in American industry, American Steel should retain its American identity, but it still tries to sell itself to a foreign company despite the wishes of its workers and national security concerns.
Pennsylvania Democratic Senator Bob Casey and Ohio Democratic Senator Sherrod Brown were the first to express clear opposition.
In addition, both Democratic and Republican lawmakers believe that the steel industry is a pillar of manufacturing, and American steel is one of its giants. For safety and revitalizing manufacturing, it should not accept acquisition intentions from foreign buyers.
Various obstacles caused American Steel to close 1.2% lower on Wednesday at $47.82 per share, about 13% lower than Nippon Steel's $55 offer.