TOKYO -- Nippon Steel's long-sought $14.1 billion acquisition of U.S. Steel and a reported pledge of $14 billion in additional investment are raising concerns about the financial impact on the Japanese steelmaker and whether it will contribute enough profit to be worth the cost.
Nippon Steel's medium-term business plan sets a goal of keeping its debt-to-equity ratio at or below 0.7. By limiting growth in liabilities while paring assets, the company had reduced its P/E ratio -- as adjusted for such factors as recognizing subordinated debt as capital -- from 0.68 in fiscal 2014 to 0.35 in fiscal 2024, or to an unadjusted 0.47.
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