While it might have seemed like the deal between United States Steel (X) and Nippon Steel (JP:5401) was about to go through without a hitch, reports suggest that the ultimate outcome remains in doubt. In fact, another political figure stepped out against the merger, and that sent Unites States Steel shares down nearly 2% in the closing minutes of Tuesday’s trading.
The latest political hit to United States Steel’s planned sale came from Josh Shapiro, governor of Pennsylvania. Shapiro declared that he couldn’t support the deal with Nippon Steel in its current form during an Internal Revenue Service event that featured Treasury Secretary Janet Yellin. Shapiro noted that “…if the U.S. steel workers aren’t happy with this deal, which they are not, I’m not happy with this deal.”
Deal Delayed Anyway
Shapiro’s opposition may be moot in the short term anyway, as United States Steel and Nippon Steel delayed a key filing ahead of the upcoming election. Reports noted that the pair have pulled the application with the Committee on Foreign Investment in the U.S., with plans to refile it later once the election has been decided. The current plan is to file it so that the CFIUS’ 45-day review period will line up with the upcoming political transition.
Nippon Steel is clearly eager to make the deal happen; it recently hired Mike Pompeo, a former Secretary of State in the U.S., to complete it. If a second Trump administration kicks in, Pompeo may be invited back in, which would make him a particular help in bringing the deal to fruition. And with Nippon Steel backing out of a Chinese joint venture, that may prove helpful regardless of how the political climate turns out.
Is United States 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 59% rally in its share price over the past year, the average X price target of $45.25 per share implies 12.42% upside potential.
