MW What's next for U.S. Steel's stock price after reports of Nippon Steel deal rejection

By Steve Goldstein

Biden set to reject deal as early as Friday

Investors were betting on a grim future for U.S. Steel after reports that President Joe Biden will officially reject the acquisition by Nippon Steel on Friday.

U.S. Steel shares $(X)$ fell 9% to $29.78 in premarket trade, continuing a slide that's taken the company's stock price well below the $55 per share Nippon Steel (JP:5401) agreed to pay.

U.S. Steel stock closed at $39.33 the day before the Nippon Steel deal was agreed in late 2023, and it hasn't closed below $30 since the deal was reached.

The New York Times and The Washington Post each reported the formal Biden rejection is set, after a federal committee reviewing the deal opted not to make a formal recommendation. President-elect Donald Trump also opposed the deal that was championed by Japan, one of the U.S.'s strongest allies.

The deal had run afoul of political opposition from the start, notably from Pennsylvania's two senators as well as Sen. J.D. Vance, the Ohio Republican who is set to become vice president.

U.S. Steel, as have other rivals, has struggled in the face of sluggish demand and weak pricing as it also deals with the start-up costs of the Big River 2 facility in Arkansas.

Analysts at JPMorgan, in a note last month, put a price target of U.S. Steel at $44 per share, even as it expected the deal to be rejected. They cited "strong stand-alone valuation support" and easing capital spending requirements, though they said the company will have to make "tough decisions" about its aging blast furnace assets.

According to FactSet, analysts on average have a $42.10 price target on U.S. Steel, and 64% of the ratings are the equivalent of buy and 36% the equivalent of hold, with no sell ratings.

Apart from index fund holders, Florida hedge fund Pentwater Capital Management is the big loser as it held a nearly 9% stake in U.S. Steel, though that stake was hedged with put options, according to a Securities and Exchange Commission filing.

-Steve Goldstein

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January 03, 2025 05:13 ET (10:13 GMT)

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