Investors thought U.S. Steel would have a bad future after President Joe Biden used his legal power on Friday to stop Nippon Steel of Japan from buying the company.
In early trade, U.S. Steel shares X -6.53% fell 6% to $30.43, continuing a drop that has put the stock price well below the $55 per share that Nippon Steel 5401 +1.18% agreed to pay.
The day before the Nippon Steel deal was made in late 2023, U.S. Steel stock closed at $39.33. Since the deal was made, it hasn’t closed below $30.
“A committee of national security and trade experts from across the executive branch found that this acquisition would put one of the biggest steel producers in the United States under foreign control, which would put our national security and our most important supply chains at risk,” Biden said in a statement. Because of this, I’m taking steps to stop this deal.
Japan is one of the United States’ strongest friends, but President-elect Donald Trump also fought against the deal.
From the beginning, politicians were against the deal. Two senators from Pennsylvania and Sen. J.D. Vance, a Republican from Ohio who is going to be vice president, were among them.
Along with its competitors, U.S. Steel has had a hard time with low prices and slow demand. It also has to deal with the costs of opening the Big River 2 plant in Arkansas.
The analysts at JPMorgan kept their “overweight” opinion on U.S. Steel and said that foreign ownership now doesn’t seem likely. They said that domestic companies could bid for all or part of U.S. Steel. For example, Nucor (NUE +0.85%) might be interested in the mini-mill assets, and Cleveland-Cliffs (CLF -0.42%) has said in public that it wants to buy mills and facilities that are covered by the United Steelworkers union.
Statista says that analysts have an average price goal of $42.10 for U.S. Steel. Of the ratings, 64% are “buy,” 36% are “hold,” and there are no “sell” ratings.
A filing with the Securities and Exchange Commission shows that Florida hedge fund Pentwater Capital Management is the biggest loser because it had a nearly 9% stock in U.S. Steel. However, the SPCC says that the stake was hedged with put options.
