TOKYO: Japan’s Nippon Steel said on Monday it would buy US Steel in a deal valued at $14.9 billion, helping it add significant capacity in a key market that is primed for a price hike.

US Steel’s shares rose about 28% to $50.35 in premarket trading, but were still trading well below the offer price of $55. That represented a premium of 142% since the company announced a strategic review process on Aug. 11.

The all-cash offer represents an equity value of about $14.1 billion and the world’s No.4 steelmaker said it had secured financing commitments to fund the transaction.

The deal is expected to help Nippon move toward 100 million tonnes of global crude steel capacity, while significantly expanding its production in the United States, where steel prices are expected to rise as automakers ramp up production following their recent deals with labor unions to end strikes.

All of US Steel’s commitments with its employees, including all collective bargaining agreements in place with its unions, will be honored, Nippon said.

The company’s executive vice president, Takahiro Mori, told Reuters in an interview that the company had operated in the United States for 40 years and that it was confident the transaction would be completed.

“Standard Steel that we own is a union company in the United States, we have a good history of working with unions. We see no regulatory or antitrust issues with the deal,” Mori said.

Nippon Steel also has an electric arc joint venture with ArcelorMittal in Alabama. Those operations are not unionized.

Pittsburgh-based US Steel’s shares had suffered after several quarters of falling revenue and profit, making it an attractive takeover target for rivals looking to add a maker of steel used by the automobile industry.