One of North America’s largest steel makers, Pittsburgh based US Steel, has accepted an offer from Japan’s Nippon Steel to acquire the company in a cash deal valued at US$14.9bn including debt.

The takeover, which was approved unanimously by US Steel’s board this week, would make the combined entity the second largest global steelmaker according to industry data.

Nippon Steel, Japan’s largest steelmaker, has agreed to pay US$55 per share for US Steel, a 25% premium on the previous day’s closing price and 60% more than the cash and share deal proposed just four months ago by Ohio based Cleveland Cliffs, an offer that was flatly rejected by US Steel.

The deal would bring together two companies that played major roles in the industrialisation of their respective countries. US Steel said in a statement the merger would “bring together two companies with rich histories of providing excellent products and services and of contributing to the development of society.

"The deal combines world leading technology and manufacturing capabilities to better serve customers in the United States and globally."

US Steel CEO David Burritt described the two companies as a “great fit” adding the deal would “increase competition here in the United States, with a great ally of the United States."

US Steel is a crucial supplier to the US automotive industry. Under the deal, it will keep its name and its headquarters in Pittsburgh where it was founded in 1901 and where it will continue to operate as a subsidiary of Nippon Steel. The enlarged company will have a steel production capacity of 90m tons of steel per year with Nippon Steel accounting for most of this.

The deal is also seen as a counterbalance to the growing dominance of China in the global steel sector. According to data released by the World Steel Association, Chinese based companies accounted for 54% of the 2b tons of steel produced worldwide last year. Chinese state owned Baowu Group is the world’s largest steelmaker with output of 132m tons last year.