Anyone hoping for a smooth handover with the sale of U.S. Steel (NYSE:X) to Nippon Steel will likely have their hopes dashed in short order. New reports suggest that the Biden administration will indeed investigate the sale, which sent U.S. Steel shares down fractionally in Thursday morning’s trading.
The latest reports note that both sides have already consulted with Treasury Department officials, especially given that the Treasury Department has the authority to block the deal in the event of a “national security threat.” This, apparently, cut little ice with the Biden administration, who noted that the deal would merit “serious scrutiny.” That’s actually not surprising; this is, after all, an election year, and Pennsylvania will be a so-called “battleground state” in the election.
How Big a Threat Can It Be?
The notion that the U.S. Steel sale would be a “national security threat” seems somewhat remote. Not only did both sides already confer with the government before the deal was even inked, but U.S. Steel doesn’t actually supply steel to the military. Just to top it off, Japan is an ally of the United States and has been so since just after World War 2. In fact, reports note that U.S. Steel production is already considered lower-grade alongside many United States mills, and Nippon Steel acquiring it will likely improve output quality.
Is U.S. Steel a Good Stock to Buy?
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 68.63% rally in its share price over the past year, the average X price target of $33.50 per share implies 30.34% downside risk.
