The interest in buying up steelmaker U.S. Steel (NYSE:X) has been fairly hot for some time. Now, it’s reaching a boiling point. Or, if not, at least a melting point. The latest reports note that Cleveland-Cliffs (NYSE:CLF) signed not only a non-disclosure agreement (NDA) but also a short standstill agreement so that it could get in on the bidding process to pick up U.S. Steel.
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The standstill agreement will run until December 1, which should allow it to complete the process effectively. Meanwhile, ArcelorMittal (NYSE:MT) is still in the running, but a newcomer has stepped in as well: Canadian steelmaker Stelco (OTHEROTC:STZHF).
That Cleveland-Cliffs signed the NDA agreement suggests that it is indeed quite eager to get in on the bidding process. Previously, Cleveland-Cliffs wouldn’t sign such an agreement, which unnerved U.S. Steel. After all, if Cleveland-Cliffs didn’t sign such an agreement, it would be able to take what it learned from its look at U.S. Steel’s books—part of a due diligence process for any such major transaction—and use it against U.S. Steel directly. But with a $7.1 billion offer on the table, Cleveland-Cliffs means to be taken seriously.
Is U.S. Steel a Good Stock to Buy?
Who will walk away with U.S. Steel? That remains to be seen. But analysts are encouraging a sale one way or another; with five Hold ratings and two Sells, U.S. Steel is considered a Moderate Sell. Further, with an average price target of $20.56, it comes with a dizzying 36.41% downside risk.
