Japanese steel manufacturing giant Nippon Steel (NISTF) (JP:5401) is set to resume talks with the U.S. Department of Commerce on its long-pending merger with U.S. Steel (X). The news was first reported by Reuters, citing comments from Nippon Steel’s President Tadashi Imai. The $14.9 billion merger agreement between Nippon and U.S. Steel has been through several ups and downs, with the major blow coming from former President Joe Biden’s tough stance to keep X’s control in American hands.
The Uncertainty Surrounding U.S. Steel Lingers
The uncertainty surrounding U.S. Steel’s future still lingers on. Although Nippon Steel is looking to reignite the merger talks, the U.S. President has a different view on the deal’s structure.
At a meeting with Japanese Prime Minister Shigeru Ishiba earlier this month, President Donald Trump also suggested that the proposed deal would take the form of a strategic investment and not a takeover. However, Imai is of the opinion that financial investments in X are already a part of its proposed acquisition. Hence, he believes that the starting point for the renewed discussions would be based primarily on the earlier merger agreement.
Imai also noted that the company would ask the Commerce Department what it was required to do in order to obtain President Trump’s green light for the takeover. Furthermore, a local Japanese newspaper noted that Japan’s Trade Minister Yoji Muto is expected to visit the U.S. in March and could discuss the possibility of the U.S. Steel takeover with U.S. officials.
Meanwhile, if Nippon Steel still fails to convince the administration, other potential suitors could emerge for U.S. Steel’s takeover, including Cleveland Cliffs (CLF).
Is X Stock a Good Buy Now?
Analysts remain divided on U.S. Steel’s stock trajectory owing to the uncertainty about the Nippon Steel deal. On TipRanks, X stock has a Moderate Buy consensus rating based on four Buys and three Hold ratings. Also, the average U.S. Steel price target of $40.17 implies 6.6% upside potential from current levels. In the past year, X stock has lost 20.5%.
