United States Steel Sells Transtar for $640M, Shares Rise 3%

The shares of leading steel producer United States Steel (X) jumped 3% to $26.41 on June 8 after it inked a deal to sell Transtar to an affiliate of Fortress Transportation and Infrastructure Investors (FTAI) for $640 million.

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FTAI invests in infrastructure and equipment in four market sectors: aviation, energy, intermodal transport and rail.

The sale of Transtar, a transportation and logistics services provider, will enable United States Steel to focus on its core businesses of mining and steel production. (See X stock analysis on TipRanks)

The sale proceeds will be used to clear debts and strengthen the financial health of the company.

United States Steel CEO David B. Burritt said, “By selling Transtar to an experienced railroad operator, we can better focus on our broader ‘Best for All’ strategy.”

He added, “By monetizing our railroad assets, we have created immediate value for our stockholders. In addition, the strong partnership we have created with FTAI will ensure continued support of our steelmaking facilities with predictable and cost-effective railroad operations.

The deal is expected to close during the third quarter of 2021, subject to certain regulatory approvals.

On June 4, UBS analyst Andreas Bokkenheuser upgraded United States Steel from Sell to Hold and doubled the price target from $15 to $30 (13.6% upside potential).

Bokkenheuser believes that steel demand is recovering from low levels seen last year due to the pandemic. The economic recovery has led to a massive increase in steel prices. Notably, hot-rolled steel coil prices have jumped over 60% year-to-date and 200% over the past year.

Overall, the stock has a Moderate Buy consensus rating based on 2 Buys and 4 Holds. United States Steel average analyst price target of $30.20 implies a 14.4% upside potential. Shares of United States Steel have jumped 154.2% over the past year.