M&A News: Nippon Steel Pushes Back Closing Date for U.S. Steel (NYSE:X) Deal

Steelmaker Nippon Steel (JP:5401) has pushed back the expected closing of its $14 billion acquisition of U.S. Steel (X) to Q1 as it awaits a decision from President Joe Biden. Initially forecast to close in Q3 or Q4, the delay comes as the U.S. national security committee referred the matter to Biden after reaching a deadlock. Biden has 15 days to decide, and he has previously said that he prefers U.S. Steel to remain American-owned.

In a statement, Nippon Steel urged Biden to conduct a “fair and fact-based evaluation” of the deal. It also emphasizes the potential to enhance U.S. Steel’s capabilities and benefit American workers and customers. There is no doubt that U.S. Steel needs to improve its operations, especially after cutting its fourth-quarter EBITDA guidance due to weak demand and pricing in Europe, which suggests that it may be more vulnerable than competitors when it comes to handling market pressures.

The acquisition has faced strong opposition from the United Steelworkers union, although some local union leaders and lawmakers have voiced support for allowing it to proceed. It is worth noting Nippon Steel has previously warned that if Biden blocks the merger, it would immediately file an appeal and argue that the decision would violate due process, according to a recent Reuters report. What seemed like a simple acquisition offer a year ago has now become a contentious political issue involving national security and labor interests.

Is X Stock a Buy or Sell?

Turning to Wall Street, analysts have a Strong Buy consensus rating on X stock based on four Buys, one Hold, and zero Sells assigned in the past three months, as indicated by the graphic below. After a 35% decline in its share price over the past year, the average X price target of $44 per share implies 39.8% upside potential.

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