The long, strange saga that is the sale of steelmaker U.S. Steel (NYSE:X) may be finally coming to an end. While we thought an end was already in hand after Nippon Steel agreed to buy the firm, we forgot one small detail: it was an election year. Therefore, all the political types came boiling out of the woodwork to weigh in and throw some doubt on the entire process. Nevertheless, X stock is up fractionally in Monday afternoon’s trading.
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Reports note that Nippon Steel is actively seeking the blessing of the steelworker’s union that works out of U.S. Steel. It hopes to have that approval in hand before April is over, and looks to close the deal completely sometime in the period between June and September. Nippon Steel agreed to terms that most shareholders should have been over the moon about, including a roughly 40% premium, or about $55 per share. With U.S. Steel currently trading just under $48 per share, that’s not as hefty a premium as it once was, but quite a bit of that premium seems to have been priced in.
Political Objections Might Be Overblown
While much of the objection from the political sector has been over environmental issues, with a side of issues about national security, a look from a different angle suggests these concerns might be overblown. For instance, Ethisphere recently declared U.S. Steel one of the world’s most ethical companies for the third year running. In fact, U.S. Steel was one of the first companies to develop a code of ethics, which it did over a century ago.
Meanwhile, in Breaking Defense, a recent article dispels some of the myths surrounding the U.S. Steel sale, and how little impact it would have on United States national security, declaring the argument that a sale makes America less safe to be “…extrarordinarily specious.”
Is U.S. Steel Stock a Good Buy Right Now?
Turning to Wall Street, analysts have a Hold consensus rating on X stock based on three Holds and one Sell assigned in the past three months, as indicated by the graphic below. After a 60.61% rally in its share price over the past year, the average X price target of $54.25 per share implies 13.49% upside potential.
