The acquisition deal between U.S. Steel (X) and Japan’s Nippon Steel (JP:5401) has taken another twist recently. Nippon Steel is now proposing to make a significant investment in U.S. Steel rather than acquiring it. The announcement came after a meeting between the Japanese Prime Minister and U.S. President Donald Trump at the White House. Following the update, U.S. Steel stock dropped about 6% on Friday.
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In a press conference on Friday, Trump said, “U.S. Steel is a very important company to us. It was the greatest company in the world for 15 years, many years ago, 80 years ago. And we didn’t want to see that leave. And it wouldn’t actually leave.”
This news came as speculation grew that Trump might approve Nippon Steel’s acquisition of U.S. Steel, despite previously opposing the deal and emphasizing the importance of keeping the company under U.S. ownership. Also, former U.S. President Joe Biden had blocked the deal on national security grounds.
New Steel Import Tariffs Complicate Deal
On Sunday, Trump disclosed plans to impose a 25% tariff on all steel and aluminum imports, raising uncertainty in the global steel industry. These tariffs are likely to increase production costs for companies involved in international trade, leading to a challenging scenario for cross-border transactions.
Further, this move could potentially lead to retaliatory measures from other countries, further escalating trade tensions.
Uncertainty Surrounds U.S. Steel and Nippon Steel Deal
The recent development has increased uncertainty about the deal. The details of the proposed investment were not disclosed. Also, Trump said that he and other officials will meet this week with the head of Nippon to discuss the future steps.
Adding to the concerns, Japanese Prime Minister Shigeru Ishiba highlighted the legal complexities of distinguishing between acquisition and investment.
Investors should note that the uncertainty about the future of the deal has weighed heavily on U.S. Steel’s stock price, which is down over 8% in the past three months.
Is X Stock a Buy or Sell?
Turning to Wall Street, U.S. Steel stock has a Moderate Buy consensus rating based on three Buys and three Holds assigned in the last three months. At $39.80, the average U.S. Steel price target implies a 7.63% upside potential.
