The merger deal between steelmakers U.S. Steel (X) and Nippon Steel (JP:5401) had, at least for a while, been thought of as a done deal. But the deal is much less done than you might think, particularly in an election year, where all the politicians are coming out to take stands, pick sides, and draw votes. And U.S. Steel stock was down over 4% in the closing minutes of Monday’s trading thanks to more of that politicking that looks to threaten the deal.
This time, though, the threat to the deal comes from a less likely source. Indeed, former—and potential—president Donald Trump came out to make clear that, under his administration, the deal would be blocked. While there is a clear chance he may not win—Polymarket has Harris just ahead of Trump at 51% to Trump’s 47%–with a little over two months to go until the election, anything could ultimately happen.
What’s more, there were significant concerns expressed as a United Steelworkers representative noted that the USW “…made a strong case” during arbitration hearings that the deal could be killed anyway. With Trump coming out against the deal, and Biden opposing the deal back in March—and Harris, by extension, trying to run on Biden’s programs—it’s not looking good either way.
Meanwhile, Back at the Arbitration…
The arbitration hearings could be a serious problem for U.S. Steel. According to reports from the Pittsburgh Post-Gazette, the issue at stake is one of successorship. The arbitration hearings—which consist of a panel of three attorneys—will determine if U.S. Steel violated a section of its labor agreement known as the “successorship clause.” This clause, according to David McCall, USW president, was effectively violated “…by not having the ultimate parent sign on.” And labor issues right now are exactly what U.S. Steel does not need.
Is U.S. Steel Stock a Good Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on X stock based on three Buys and one Hold assigned in the past three months, as indicated by the graphic below. After a 25.75% rally in its share price over the past year, the average X price target of $45.25 per share implies 15.21% upside potential.
