The story we’ve been following for months featuring United States Steel (NYSE:X) came to a close with a buyer. None other than Japanese steelmaker Nippon Steel (OTC:NISTF) was set to take over despite multiple potential buyers ready to join in. But the story isn’t over yet, as new reports have investors fleeing, sending U.S. Steel down modestly in the closing minutes of Wednesday’s trading session. Several elements of government are not taking the news well that U.S. Steel is about to be wholly owned by Nippon Steel. Thus, it’s little surprise that the Committee on Foreign Investment in the U.S. (CFIUS) is already set to get involved and plans a “long and rigorous review,” reports note.
However, despite the plan to grind out a review over as long and extensive a fashion as possible, the deal is likely to go through anyway. While some elements of the deal may require retooling—like supply arrangements—there simply won’t be much reason to actually halt the deal.
Pennsylvania Isn’t Happy Either
The federal government’s involvement isn’t all that encouraging, but neither is the rancor coming out of Pennsylvania. Word from the Pittsburgh Post-Gazette says that Congressional delegates are already petitioning for the deal to be shut down. Though, as we’ve already seen, there’s not much reason to actually shut down said deal.
The delegation cited such things as national security interests and employment options, but given that Japan has been an active ally for decades, there’s, again, not much that can be done. Besides, Nippon Steel paid big for this, dropping $14.1 billion on U.S. Steel. That’s about 7.3 times its 12-month earnings, reports note.
Will United States Steel Stock Go Up?
Turning to Wall Street, analysts have a Hold consensus rating on X stock based on one Buy, four Holds, and one Sell assigned in the past three months, as indicated by the graphic below. After an 80.43% rally in its share price over the past year, the average X price target of $34.75 per share implies 27.41% downside risk.
