Nippon Steel hasn’t even really completed its purchase of steelmaker U.S. Steel (NYSE:X) just yet, but already, there are signs of trouble. Seems the union isn’t happy with some recent assurances, and they’re making a fuss accordingly. The move sent U.S. Steel stock to a near-low at one point, but a small rally followed, and now it’s only down about 2% in Tuesday afternoon’s trading.
Nippon Steel issued what it called a “binding commitment” back on March 27, in the form of a letter that made clear no layoffs would come from this transaction, nor would there be any to follow “…through at least the term…” of the current contract.
Further, Nippon Steel pledged an extra $1.4 billion in capital to go into the operation. All of this should have proven quite satisfactory, but the union rejected the letter and all it stood for, declaring it “…another collection of empty promises and open-ended language that would enable it to skirt obligations to workers and retirees.”
Pardon the Union
Meanwhile, there are signs emerging that no one particularly cares what the union thinks about this. With a shareholder vote coming up April 12, there are signs that shareholders are coming around to the notion of Nippon Steel buying up U.S. Steel. There are also signs, though, that the deal may not go through, as Cleveland-Cliffs (NYSE:CLF) is already waiting for it to fall apart to stage a second, lower offer to pick up the pieces. And Nippon Steel, for its part, is actively touting its tech advantage, noting it has “…over 2,000 patents” that it can bring to the table.
Is U.S. Steel Stock a Good Buy?
Turning to Wall Street, analysts have a Hold consensus rating on U.S. Steel stock based on four Holds and one Sell assigned in the past three months, as indicated by the graphic below. After a 57.51% rally in its share price over the past year, the average X price target of $51.75 per share implies 26.11% upside potential.
